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PBGC Proposes Rules Allowing Lifetime Benefit Rollover Option For Defined Contribution Participant Account Balances

April 1, 2014

The Pension Benefit Guaranty Corporation (PBGC) is touting a proposal that would add the option for 401(k) and other defined contribution plan participants to elect at time of distribution to have the balance of their 401(k) plan account converted to traditional pensions.

Under proposed rules slated for publication in the April 2, 2014 Federal Register, the PBGC plans to define rules under which the defined contribution plans could offer employees with rollover options the opportunity to move their benefits from defined contribution plans to defined benefit plans and outline safeguards for benefits that are rolled over from defined contribution plans.

Under the new proposal, benefits earned from a rollover generally would not be affected by PBGC’s maximum guarantee limits. Currently the agency’s maximum guaranteed benefit for a 65-year-old retiree is almost $59,320 a year.

Also, rollover amounts generally would remain untouched by PBGC’s so-called five-year phase-in limits. Normally, benefit increases from changes to a plan in the five years before it ends are partially guaranteed. For instance, 20 percent of the increase is paid after one year, 40 percent after two years and so on. Under the new proposal, these restrictions generally would not apply

The PBGC proposal to allow defined contribution participants to convert their account balances into lifetime annuities at distribution reflects the general enthusiasm within the PBGC, the Employee Benefit Security Administration (EBSA) and other agencies for arrangements that annuitize defined contribution accounts that provides a guaranteed fixed income for the participant for the balance of his or her lifetime. In its April 1, 2014 announcement of impending publication of the proposed rule, the PBGC touts its proposal as making it “easier for participants in 401(k) plans to get higher returns and get lifetime income” by moving their funds into traditional pensions while removing “the fear that the amounts rolled over would suffer under guarantee limits should PBGC step in and pay benefits.”

“What we’re doing will hopefully give people an incentive to choose a savings option that they can’t outlive or outspend,” said PBGC Director Josh Gotbaum. “Annuities always offer greater retirement security.”

In the wake of the massive decline in retirement savings that came with scandals like Enron and Madoff and the economic downturn have fueled new support among the PBGC and other supporters of “lifetime income” arrangements, critics warn that the annuitizing an account to provide lifetime benefits in a low performing market is costly and cuts the recipient out of the opportunity to benefit if and when the market strengthens. They also warn that market downturns also can adversely affect the security of annuitized products. The notorious failures of the insurers providing “guaranteed investment income” in the 1980s led to the demise of GICs just as the real estate bust necessitated a government bailout to keep AIG and other insurers afloat. The PBGC and other advocates hope that their proposed standards for lifetime income accounts can produce the benefits of a lifetime income with little risk to the recipients.

For Representation, Training & Other Resources

If you need assistance monitoring these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. The scribe for the ABA JCEB Annual Agency Meeting with the Office of Civil Rights (OCR) for the past several years who has worked on medical and other privacy concerns throughout her career, she regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others, defends covered entities and business associates against OCR, FTC and other privacy and data security investigations, serves as special counsel in litigation arising from these concerns and is the author of several highly regarded publications on HIPAA and other privacy and security concerns.

Ms. Stamer also regularly works with OCR, FTC, USSS, FBI and state and local law enforcement on privacy, data security, health care, benefits and insurance and other matters, publishes and speaks extensively on medical and other privacy and data security, 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 publications and insights appear in the 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. For instance, Ms. Stamer for the third year will serve as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR. Her insights on HIPAA risk management and compliance frequently appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she 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. You can get more information about her HIPAA and other experience here.

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 distributions here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here. For important information concerning this communication click here. ©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.

Comments Off on PBGC Proposes Rules Allowing Lifetime Benefit Rollover Option For Defined Contribution Participant Account Balances | Employers, ERISA, Health Plans, HIPAA, Human Resources, Insurance | Tagged: 401(k), annuities, defined contribution plan, GIC, Lifetime income, PBGC, Pensions, plan distributions, retirement, retirement income, retirement security | Permalink
Posted by Cynthia Marcotte Stamer

ONC HIPAA Security Risk Assessment Tool Intended To Help Covered Entities Assess Compliance

March 31, 2014

Health care providers, health plans, health care clearinghouses and their business associates Health Insurance Portability and Accountability Act (HIPAA) should check out the new Security Risk Assessment (SRA) Tool (Tool) application from the Office of the National Coordinator for Health IT (ONC). ONC says the Tool will help users take a self-directed tour of and assess compliance with the HIPAA Security Rule more understandable and security risk assessments easier. The Tool includes:

Context sections to help understand potential threats, vulnerabilities, and impacts
Examples of safeguards that could be instituted
Ability to export the report as an Excel or pdf document to share or analyze the information in a convenient format.

Download the Windows version of the tool at http://www.HealthIT.gov/security-risk-assessment or the iOS iPad version from the Apple App Store (search under “HHS SRA Tool”).

Public comments on the SRA Tool will be accepted at http://www.HealthIT.gov/security-risk-assessment until June 2. ONC says it will use comments to improve the SRA Tool in future update cycles.

For Representation, Training & Other Resources

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Posted by Cynthia Marcotte Stamer

List of Countries Excluded From Foreign Earned Income Exclusion Minimum Time Requirements Published

March 24, 2014

Revenue Procedure 2014-25 has the list of countries for tax year 2013 for which the minimum time requirements are waived for purposes of the foreign earned income exclusion. It will be formally published in Internal Revenue Bulletin 2014-15 on April 7, 2014.

For Representation, Training & Other Resources

If you need assistance monitoring or responding to these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Comments Off on List of Countries Excluded From Foreign Earned Income Exclusion Minimum Time Requirements Published | Defined Benefit Plans, Defined Contribution Plans, Employers, ERISA, Human Resources, Insurance, Retirement Plans | Tagged: cash balance plans, Cycle C, determination letter, Determination Letters, ex patriate, International, Qualified Plans, Retirement Plans | Permalink
Posted by Cynthia Marcotte Stamer

Some Sponsors Should Act by 3/31 To Withdraw Individually-Designed Cash Balance Plan Approval Request

March 19, 2014

Employer or other sponsors of individually-designed cash balance plans who have pending Cycle C determination letter applications pending before the Internal Revenue Service (IRA) seeking approval of the qualification of their individually-designed plan who now prefer instead to adopt a pre-approved cash balance plan should act quickly to withdraw their pending application. The IRS has announced that these parties can get a refund of the application fee paid for the individually-designed plan application by signing the Form 8905, Certification of Intent to Adopt a Pre-approved Plan , by March 31, 2014 and withdrawing their pending applications for individually designed cash balance plans by May 31, 2014 in accordance with the instructions set forth later in this article.

Background

Announcement 2014-4 extended the submission period for pre-approved defined benefit pension plans from January 31, 2014, to February 2, 2015, to allow time for the IRS to expand the pre-approved program to let plans with cash balance features. The announcement also allowed Cycle C plan sponsors who want to adopt a pre-approved cash balance plan to complete and sign a Form 8905, Certification of Intent to Adopt a Pre-approved Plan by March 31, 2014, instead of submitting determination letter applications for individually designed plans by the Cycle C deadline of January 31, 2014.

Withdrawals for Cycle C Applicants For Individually-Designed Cash Balance Plan Approval

Cycle C applicants who already submitted their applications for individually-designed cash balance plans during the second Cycle C remedial amendment cycle that ended January 31, 2014, and who instead wish to adopt a pre-approved cash balance plan, may sign the Form 8905, withdraw the application, and request a refund of the user fee by complying with the instructions below.

The IRS says that a request for return of A Cycle C determination letter application and a refund of the user fee must be made in writing and postmarked (or faxed) by May 31, 2014 to: Internal Revenue Service 550 Main Street Cincinnati, OH 45202 Attn: Joyce Heinbuch. Correspondence sent via Fax should be sent to the attention of Ms. Heinbuch at (513) 263-4699 (not a toll-free call).

The written request must include:

the name of the plan sponsor
plan number
EIN
the document locator number, if known (shown on your IRS acknowledgement letter)
the following statement in bold letters: “Per Announcement 2014-4, we are withdrawing this application in order to submit under the pre-approved program.”

For additional information and resources, see Deadline Extended For Pre-Approved Defined Benefit Plans and FAQs on Withdrawing Cycle C Applications or contact your preferred employee benefit attorney.

For Representation, Training & Other Resources

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Posted by Cynthia Marcotte Stamer

HHS Extends Health Plan Certification of Compliance Comment Period

March 18, 2014

The Department of Health and Human Services (HHS) has extended the comment period for the proposed rule, “Administrative Simplification: Health Plan Certification of Compliance” to April 3, 2014 in hopes of receiving additional input from third party administrators (TPAs) and self-insured plans.

HHS is now accepting public comments on the proposed rule through April 3, 2014.

The Certification of Compliance for Health Plans proposed rule is different from previous Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification regulations because it affects more and different types of entities.

For example, many third party administrators, self-funded health plans, and group health plans that have not been impacted by previous HIPAA Administrative Simplification requirements will be affected by this rule, even if they do not directly conduct HIPAA covered transactions.

The proposed rule would require controlling health plans to submit documentation on or before December 31, 2015. It would also establish penalty fees for a controlling health plan that fails to comply with the Certification of Compliance requirements.

HHS says the goal of the extension of the comment period is to provide self-insured health plans and their TPAs time to understand and offer feedback on the business impacts of the Certification of Compliance proposed rule. HHS encourages these entities to submit feedback so that their comments and suggestions can be considered during the policy-making process.

The proposed rules will require self-insured health plans and their TPAs to incur financial and operational expense to implement the necessary technology, data collection and other arrangements to come into compliance with the proposed rules. To help minimize these burdens to the extent possible, these and other concerned parties should review the rules and share their concerns and input as soon as possible. Accordingly, self-insured health plans, their sponsors, TPAs and advisors should review the proposed rules and provide relevant input as soon as possible and no later than the extended April 3, 2014 due date.

For Representation, Training & Other Resources

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Posted by Cynthia Marcotte Stamer

HIPAA Covered Entities Should Review & Correct HIPAA Policies In Response To New County Hospital Resolution Agreement, Other Developments

March 16, 2014

Health Department HIPAA Violations Cost County $250,000, Requires Sweeping HIPAA Reforms

Hear Update On Resolution Agreement & Other New HIPAA Developments At 3/18 North Texas Healthcare Professionals Association Meeting

Skagit County, Washington will pay a $215,000 monetary settlement and work closely with the Department of Health and Human Services (HHS) Office of Civil Rights (OCR) to correct deficiencies in its HIPAA compliance program to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy, Security, and Breach Notification Rules by the Skagit County Public Health Department (Health Department) under a Resolution Agreement announced by OCR on March 7, 2014. The Resolution Agreement makes clear the need for health care providers, health plans, health care clearinghouses and their business associates to update and maintain their policies and practices in compliance with the constantly evolving OCR guidance and resolution agreements, as well as to timely investigate and report breaches. Interested persons are invited to hear a briefing on a series of new developments including this latest Resolution Agreement at the March 18, 2014 North Texas Healthcare Professionals Association Meeting.

OCR investigated the Health Department after receiving a breach report that unknown parties accessed money receipts with electronic protected health information (ePHI) of seven individuals after the ePHI had been inadvertently moved to a publicly accessible server maintained by the County.

OCR reports its investigation revealed a broader exposure of protected health information involved in the incident, which included the ePHI of 1,581 individuals. Many of the accessible files involved sensitive information, including protected health information about the testing and treatment of infectious diseases.

OCR’s investigation further uncovered general and widespread non-compliance by Skagit County with the HIPAA Privacy, Security, and Breach Notification Rules.

Specifically, the Resolution Agreement between OCR and the Health Department states that OCR found the following conduct occurred (“Covered Conduct”).

From approximately September 14, 2011 until September 28, 2011, Skagit County disclosed the ePHI of 1,581 individuals in violation of the Privacy Rule by providing access to ePHI on its public web server;
From November 28, 2011 until present, Skagit County failed to provide notification as required by the Breach Notification Rule to all of the individuals for whom it knew or should have known that the privacy or security of the individual’s ePHI had been compromised as a result of the breach incident;
From April 20, 2005 until present, Skagit County failed to implement sufficient policies and procedures to prevent, detect, contain, and correct security violations;
From April 20, 2005 until June 1, 2012, Skagit County failed to implement and maintain in written or electronic form policies and procedures reasonably designed to ensure compliance with the Security Rule; and
From April 20, 2005 until present, Skagit County failed to provide security awareness and training to all workforce members, including its Information Security staff members, as necessary and appropriate for the workforce members to carry out their functions within Skagit County.

To resolve OCR’s allegations of these breaches, Skagit County agrees under the Resolution Agreement to pay HHS $215,000.00 and to ensure that the Health Department implements a series of corrective actions. Among other things, the Resolution Agreement requires that the Health Department:

Provide substitute Breach Notification to individuals not previously notified of the breach of their ePHI in accordance with the Resolution Agreement
Revise to the satisfaction of OCR and adopt revised accounting for disclosure, hybrid entity designations, policies on safeguarding PHI, including its sample business associate agreements;
Conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information (ePHI) held by the covered health care components of Skagit County as identified in its hybrid entity documentation approved by HHS and implement security measures sufficient to reduce the risks and vulnerabilities identified in the risk analysis to a reasonable and appropriate level.
Create and revise, as necessary, written policies and procedures for its covered health care components to comply with the Federal standards that govern the privacy, security, and breach notification of individually identifiable health information;
Comply with strict workforce training requirements;
Notify and OCR of the occurrence of some reported breaches, its investigation and corrective actions;
Provide a summary of the reported events and the status of any corrective and preventative action relating to all such Reportable Events; and
Provide OCR with an attestation signed by an officer of Skagit County attesting that he or she has reviewed the Annual Report, has made a reasonable inquiry regarding its content and believes that, upon such inquiry, the information is accurate and truthful.

In addition to bringing its policies and practices up to date with OCR regulations in effect at the time of the breach that resulted in the Resolution Agreement, the Health Department also will have to update its policies and practices to meet changes to OCR’s HIPAA rules that have taken effect since the breach under the revised rules published by OCR in its Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under the Health Information Technology for Economic and Clinical Health Act and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules; Final Rule (Omnibus Final Rule) OCR published January 25, 2013 as well as a series of recently issued OCR rules such as the following:

HIPAA Privacy Rule and Sharing Information Related to Mental Health published on
Spanish Language Model Notices of Privacy Practices published on 2/13/14
CLIA Program and HIPAA Privacy Rule; Patients’ Access to Test Reports published on 2/3/14; and
Proposed Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule and the National Instant Criminal Background Check System (NICS) published on 1/7/14
HIPAA Privacy Rule: Disclosures for Emergency Preparedness – A Decision Tool
The HIPAA Privacy Rule and Refill Reminders and Other Communications about a Drug or Biologic Currently Being Prescribed for the Individual
Health Information of Deceased Individuals
Student Immunizations; and
Model Notices of Privacy Practices (English).With OCR stepping up both audits and enforcement and penalties for violations higher than ever since the HITECH Act amended HIPAA, Covered Entities and business associates should act quickly to review and update their policies, practices and training to implement any adjustments needed to maintain compliance and manage other risks under these ever-evolving HIPAA standards.

Covered Entities & Business Associates Should Review & Tighten Practices in Response To Resolution Agreement & Other New Guidance

Other covered entities and their business associates should carefully evaluate and tighten their existing practices in response to the Resolution Agreement and other recent guidance. In the past, OCR officials have stated it expects that other health care providers, health plans, health care clearinghouses and their business associates will review resolution agreements like this one along with other emerging OCR guidance and update their practices as necessary to address concerns within their own organization that might be similar to those reflected in the applicable resolution agreement. The Resolution Agreement documents this expectation by specifically incorporating this requirement as part of its terms.

When conducting these efforts, Covered Entities and business associates not only carefully watch for and react promptly to new OCR guidance and enforcement actions, but also document their commitment and ongoing compliance and risk management activities to help support their ability to show their organization maintains the necessary “culture of compliance” commitment needed to mitigate risks in the event of a breach or other HIPAA violation and take well-documented, reasonable steps to encourage their business associates to do the same. When carrying out these activities, most covered entities and business associates also will want to take steps to monitor potential responsibilities and exposures under other federal and state laws like the privacy and data security requirements that often apply to personal financial information, trade secrets or other sensitive data under applicable federal and state laws and judicial precedent.

Hear Stamer’s Update On Resolution Agreement & Other New HIPAA Developments At 3/18 North Texas Healthcare Professionals Association Meeting

Scribe for the American Bar Association Annual Agency Meeting with OCR for the fourth year, attorney Cynthia Marcotte Stamer will overview these and other HIPAA developments when she presents “Tutoring On OCR’s Latest HIPAA Homework” at the North Texas Healthcare Professionals Association Study Group Luncheon on Tuesday, March 18, 2014 from 11:30 p.m. to 1:00 p.m. at the offices of the Dallas Ft Worth Hospital Council, 250 Decker Drive, Irving, TX 75062-2706. A complimentary luncheon will be served to guests to who register in advance. There is no charge to particulate but space is limited. RSVP here by Noon on March 17, 2014.

For Representation, Training & Other Resources

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Posted by Cynthia Marcotte Stamer

NLRB Helps Union Force Another Health Care Employer To Recognize & Bargain With Union

March 13, 2014

Hospitals, skilled nursing and other health care organizations need to be concerned about union organizing of their employees in light of the growing success of unions with the aid of the pro-union support and agenda of the National Labor Relations Board (NLRB) under the Obama Administration’s leadership. The Administration’s goal of telling health care providers what to do extends well beyond Medicare and Medicaid into their workforce and terms and conditions of employment.

On February 21, 2014, for instance, the Obama Administration helped the Service Employees International Union (the Union) force Holy Cross Youth and Family Services, Inc., d/b/a Kairos Healthcare (the Employer), a provider of drug and alcohol rehabilitation services, to recognize and bargain with the over terms and conditions of employees with the Union by securing a court order forcing the employer to recognize and bargain with the Union.

Ruling in a lawsuit filed by the NLRB against the Employer on February 21, a federal court judge for the Eastern District of Michigan ordered upheld the allegations made in August 23, 2013 by the National Labor Relations Board (NLRB) Detroit, Michigan Regional Office that the Employer violated the National Labor Relations Act when it withdrew recognition from Local 517M, made unilateral changes to employees’ terms and conditions of employment without affording the Union an opportunity to bargain over those changes, and failed to provide relevant information to the Union to help in its bargaining with the Employer on behalf of the employees.

The Regional Office sought, and the Board authorized, seeking interim injunctive relief to return the parties to the bargaining table pending final resolution of the matter, to require the Employer to provide the Union with the information it requested and, upon request, to rescind the unilateral changes made to employees’ terms and conditions of employment.

On February 21, 2014, the District upheld the Regional Office’s action. It ruled that an interim injunction was appropriate to prevent loss of Union support, to keep the employees’ right to bargain with their Employer through their chosen bargaining representative, and to provide the Union with the information it needs to evaluate and make bargaining proposals while the administrative case is pending before the Board.

The case is one of a growing number of actions where the NLRB has used is powers to help Unions force health care and other employers to yield to union demands. See e.g., Specialty Healthcare and Rehabilitation of Mobile, Board Case No. 15-CA-68248 (reported at 357 NLRB No. 174) (6th Cir. decided August 15, 2013 under the name Kindred Nursing Centers East, LLC f/k/a Specialty Healthcare and Rehabilitation of Mobile v. NLRB).

These decisions should remind health care and other employers of the highly union-friendly bent of the NLRB under the current administration, as well as the hazards of mishandling efforts to defend against union organizing and other protected activities under the NLRA. Beyond the obligation to recognize and bargain with properly certified collective bargaining unions, the NLRB and other federal labor laws also grant employees a host of other protections. Among these are recently affirmed rights-even for a worker not represented by a union – to insist another employee be present when participating in disciplinary and certain other meetings with management, rules limit the ability of employers to prohibit or restrict employees requiring employees to keep confidential and not discuss among each other salary, wages or other terms of compensation or employment terms and conditions, and others. The Obama Administration has made known its desire to expand these rights further and has carried out an aggressive legislative, regulatory and enforcement campaign in pursuit of this goal since taking office. For this reason, health care or other organizations should seek the advice and assistance of qualified legal counsel experienced with labor management relations matters to review policies for compliance, to prepare and administer anti-organizing activities, and to evaluate and respond to union organizing or bargaining activities.

For Advice, Training & Other Resources

If you need assistance monitoring these and other workforce, benefits and compensation regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, 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, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies. Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others. She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the 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 http://www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update distributions here including:

New OCR Guidance Assigns More HIPAA Homework Health Plans, Providers, Business Associates and Employers

Agencies Clarify Applicability of ACA Out-Of-Pocket Versus Deductible Cost Sharing Limitations

Medicare Secondary Payer Mandatory Reporting Threshold Clarified

Statistics, OSHA Lawsuit Against AT&T Operator & Other DOL Action Highlights Rising Retaliation Exposures

Government Contractor SCA Violation Costs It $2M & 3 Year Government Contracts Disbarment

Rules For Reporting ACA Health Insurance Provider Information Are Out

IRS: Insurers Taxed On ACA Annual Fee Assessments Collected From Customers

2013 Cumulative List of Plan Plan Qualification Requirements Helpful Resource To Monitor Plan Updates

IRS Gives Temporary Nondiscrimination Relief For Closed Defined Benefit Plans

New IRS Guidance On Claiming Small Business Health Care Tax Credit When No SHOP Enrollment Option

IRS Updates, Supplements Cafeteria Plan & HSA Post-Windsor Same-Sex Participant Guidance

IRS Published Covered Compensation Table For 2014

J.P. Morgan Chase Hit For $461M For Madoff-Related Bank Secrecy Act Violations

Dermatology Practice To Pay $150K To Settle Charges It Breached HIPAA Breach Notice Rule

Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification

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

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

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

2014 Standard Mileage Rates Announced

Careful Selection & Contracting With Vendors Critical Part of Health Plan Renewals

USI Advisors Will Pay $1.27 Million To Settle Charges It Violated ERISA Fee Disclosure Requirements

Wal-Mart Settlement Shows ADA Risks When Considering Employee Return To Work Accommodation Requests & Inquiries

Employer Pays $475,000 To Settle ADA Discrimination Lawsuit Challenging Medical Fitness Testing For EMTs, Firefighters & Other Public Safety Worker’s

Employers & Plan Fiduciaries Reminded To Confirm Credentials & Bonding For Internal Staff, Plan Fiduciaries & Vendors Dealing With Benefits

Federal Mandate That Employer Health Plans Must Cover 100% Of Contraceptive, Other Women’s Health Services With No Cost Sharing Now Effective

Use NIH & Other Free Government Resources To Help Round Out Wellness Programs

12 Steps Every Employer With A Health Plan Should Do Now To Manage 2012-14 Health Plan Risks & Liabilities

NLRB Moves To Promote Non-Union Employee Use of Collective Action Rights By Launching Webpage

Making Wellness Work On A Shoestring Budget

Tighten Defensibility of Criminal & Other Background Check Practices In Light of Labor Department Non-Discrimination Regulation & Enforcement Emphasis

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here. For important information about this communication click here.

NOTE: This article is provided for educational purposes. It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization. Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.

Hospitals, skilled nursing and other health care organizations need to be concerned about union organizing of their employees in light of the growing success of unions with the aid of the pro-union support and agenda of the National Labor Relations Board (NLRB) under the Obama Administration’s leadership. The Administration’s goal of telling health care providers what to do extends well beyond Medicare and Medicaid into their workforce and terms and conditions of employment.

On February 21, 2014, for instance, the Obama Administration helped the Service Employees International Union (the Union) force Holy Cross Youth and Family Services, Inc., d/b/a Kairos Healthcare (the Employer), a provider of drug and alcohol rehabilitation services, to recognize and bargain with the over terms and conditions of employees with the Union by securing a court order forcing the employer to recognize and bargain with the Union.

Ruling in a lawsuit filed by the NLRB against the…

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Posted by Cynthia Marcotte Stamer

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

March 10, 2014

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

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

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

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

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

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

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

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

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

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

For Help With Compliance & Risk Management and Defense

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

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

Other Resources

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

About Solutions Law Press

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

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Posted by Cynthia Marcotte Stamer

HHS Extends Proposed EDI Rule Time to 4/3 To Get More Input From Self-Insured Plans, TPAs

March 6, 2014

Third party administrators (TPAs), self-insured health plans and concerned payers and plan sponsors now have a little more time to comment on the Department of Health & Human Services (HHS) proposed rule, “Administrative Simplification: Health Plan Certification of Compliance.”

HHS announced its extension to April 3, 2014 of the comment period today in specific hopes that it will receive additional comments from TPAs and self-insured plans

As proposed, the proposed rule would require controlling health plans to submit documentation on or before December 31, 2015. It would also establish penalty fees for a controlling health plan that fails to comply with the Certification of Compliance requirements.

HHS says that the goal of the extension of the comment period is to provide these entities with time to understand and offer feedback on the business impacts of the Certification of Compliance proposed rule. HHS encourages these entities to submit feedback so that their comments and suggestions can be considered during the policy-making process.

For Representation, Training & Other Resources

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Posted by Cynthia Marcotte Stamer

New OCR Guidance Assigns More HIPAA Homework Health Plans, Providers, Business Associates and Employers

March 5, 2014

Think your health plan, health care organization, health care clearinghouse or their business associates has health care privacy covered? Think again.

A series of supplemental guidance issued by the Department of Health & Human Services Office of Civil Rights (OCR) in recent weeks is giving health care providers, health plans, health care clearinghouses (Covered Entities) and their business associates even more to do in reviewing and updating their policies, practices and training for handing protected health information (PHI) beyond bringing their policies and practices into line with OCR’s restatement and update to the Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under the Health Information Technology for Economic and Clinical Health Act and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules; Final Rule (Omnibus Final Rule) OCR published January 25, 2013.

Covered Entities generally have been required to comply with most requirements the Omnibus Final Rule’s restated regulations restating OCR’s regulations implementing the Health Insurance Portability & Accountability Act (HIPAA) Privacy, Security and Breach Notification Rules to reflect HIPAA amendments enacted by the Health Information Technology for Economic and Clinical Health (HITECH) Act since the Omnibus Final Rule took effect on March 26, 2013 and to have updated business associate agreements in place since September 23, 2013. Meanwhile, the Omnibus Final Rule generally has required business associates have updated business associate agreements in place and otherwise to have come into compliance with all of the applicable requirements of the Omnibus Final Rule since September 23, 2013. Although these deadlines are long past, many Covered Entities and business associates have yet to complete the policy, process and training updates required to comply with the rule changes implemented in the Omnibus Final Rule.

Even if a Covered Entity or business associate completed the updates required to comply with the Omnibus Final Rule, however, recent supplemental guidance published by OCR means that most organizations now have even more work to do on HIPAA compliance. This includes the following supplemental guidance on its interpretation and enforcement of HIPAA against Covered Entities and business associates published by OCR since January 1, 2014 alone:

HIPAA Privacy Rule and Sharing Information Related to Mental Health published on
Spanish Language Model Notices of Privacy Practices published on 2/13/14
CLIA Program and HIPAA Privacy Rule; Patients’ Access to Test Reports published on 2/3/14; and
Proposed Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule and the National Instant Criminal Background Check System (NICS) published on 1/7/14.

Beyond this 2014 guidance, Covered Entities and their business associates also should look at enforcement actions and data as well as other guidance OCR issued during 2013 after publishing the Omnibus Final Rule such as:

With OCR stepping up both audits and enforcement and penalties for violations higher than ever since the HITECH Act amended HIPAA, Covered Entities and business associates should act quickly to review and update their policies, practices and training to implement any adjustments needed to maintain compliance and manage other risks under these ever-evolving HIPAA standards.

For Representation, Training & Other Resources

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Posted by Cynthia Marcotte Stamer

Agencies Clarify Applicability of ACA Out-Of-Pocket Versus Deductible Cost Sharing Limitations

March 4, 2014

Non-grandfathered self-insured and large group health plans must comply with the out-of-pocket limits in 2014 but pending further guidance are excused from the duty to comply with deductible limitations imposed by the cost-sharing limitations of the Patient Protection & Affordable Care Act (ACA) according to new guidance jointly published February 20, 2013 by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the “Departments”) in “FAQS About Affordable Care Act Implementation (Part XII)” (hereafter, the “FAQ”). However, the FAQ includes a transitional rule that allows plans to apply separate out-of-pocket maximums to prescription drug coverage and other group health plan for 2014, to allow them time to adjust contracts in response to the requirement.

ACA Cost-Sharing Limits

Public Health Service (PHS) Act § 2707(b), as added by the ACA, requires a group health plan to ensure that any annual cost-sharing imposed under the plan does not exceed the limitations provided for under ACA §§1302(c)(1) and (c)(2). § 1302(c)(1) of ACA requires that group health plans limit out-of-pocket maximums while ACA § 1302(c)(2) limits deductibles for employer-sponsored plans.

ACA Deductible Limits

The FAQ clarifies that pending further guidance, self-insured group health plans and large group health plans currently are not generally required to comply with ACA’s deductible limitations. According to the FAQ, the Departments currently view the deductible limits as generally applicable only to non-grandfathered small group insurance coverage and qualified health plans offered in the small group market. Additionally, the FAQ notes that pursuant to ACA § 1302(c)(2)(C), small group market health insurance coverage may exceed the annual deductible limit if it cannot reasonably reach a given level of coverage (metal tier) without exceeding the deductible limit.

In contrast, the FAQ states about self-insured and large group health plans, the Departments intend to engage in future rule making to implement PHS Act § 2707(b) with respect to self-insured and large group health plans. However, the FAQ reports that the Departments continue to believe that only plans and issuers in the small group market are required to comply with the deductible limit described in ACA § 1302(c)(2).

The Departments invite interested parties to submit comments or other input relative to these deliberations no later than April 22, 2013 to e.ohpsca-2707.ebsa@dol.gov.

Until that rule making is promulgated and effective, however, the FAQ states that a self-insured or large group health plan can rely on the Departments’ stated intention to apply the deductible limits imposed by § 1302(c)(2) of the ACA only on plans and issuers in the small group market. Accordingly, only plans and issuers in the small group market currently must comply with the ACA deductible limitations pending further guidance.

ACA Annual Out-Of-Pocket Maximum

In contrast, the FAQ confirms that all non-exempt, non-grandfathered group health plans – including self-insured and large and small insured group health plans must comply with ACA’s annual limits on out-of-pocket maximums.

The FAQ reaffirms statements in the preamble to the HHS final regulation on standards related to essential health benefits that the Departments read PHS Act § 2707(b) as requiring all non-grandfathered group health plans subject to ACA to comply with the annual limitation on out-of-pocket maximums described in ACA § 1302(c)(1).

While stating all non-grandfathered non-exempt group health plans generally must comply with the out-of-pocket maximum rules, the Departments recognize in the FAQ that the use by many plans of multiple service providers to help administer benefits (such as one third-party administrator for major medical coverage, a separate pharmacy benefit manager, and a separate managed behavioral health organization) may create compliance challenges since separate plan service providers may impose different levels of out-of-pocket limitations and may use different

methods for crediting participants’ expenses against any out-of-pocket maximums. To allow plans time to implement the arrangements to adjust plans and coordinate communications, the FAQ states that only for the first plan year beginning on or after January 1, 2014, where a group health plan or group health insurance issuer uses more than one service provider to administer benefits that are subject to the annual limitation on out-of-pocket maximums under ACA §§ 2707(a) or 2707(b), the Departments will consider the annual limitation on out-of-pocket maximums to be satisfied if the following conditions are satisfied:

The plan complies with the requirements with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage);
To the extent the plan or any health insurance coverage includes an out-of-pocket maximum on coverage that does not consist solely of major medical coverage (for example, if a separate out-of-pocket maximum applies with respect to prescription drug coverage), such out-of-pocket maximum does not exceed the dollar amounts set forth in ACA § 1302(c)(1); and
The plan complies with existing regulations implementing Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) which prohibit a group health plan (or health insurance coverage offered in connection with a group health plan) from applying a cumulative financial requirement or treatment limitation, such as an out-of-pocket maximum, to mental health or substance use disorder benefits that accumulates separately from any such cumulative financial requirement or treatment limitation established for medical/surgical benefits.

Accordingly, while the FAQ generally allows plans using separate vendors to separately apply out-of-pocket maximums to prescription drug coverage from medical benefits generally, this is not allowed to be accomplished where the effect would be to impose an annual out-of-pocket maximum on all medical/surgical benefits and a separate annual out-of-pocket maximum on all mental health and substance use disorder benefits in violation of the MHPAEA.

The FAQ is one of many clarifications and other guidance implementing the ACA Rules. Compliance with these requirements as implemented is critical, as group health plans and insurers, their fiduciaries and sponsors face a myriad of exposures for violating these and other health plan rules. In the case of these and many other federal health plan rules, this includes an often overlooked obligation imposed under Internal Revenue Code § 6039D to self-identify, self-report and pay excises taxes under that provision in the event of a violation, as well as traditionally applicable ERISA exposures for violating federal benefit and coverage mandates. In light of these risks, health insurers, group health plan sponsors, fiduciaries and service providers are urged to act diligently to amend their plans and take other necessary arrangements to administer their programs in accordance with the applicable rules.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

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Posted by Cynthia Marcotte Stamer

Medicare Secondary Payer Mandatory Reporting Threshold Clarified

March 4, 2014

The Centers for Medicare & Medicaid Services (CMS) has revised its guidance in its Non-Group Health Plan (NGHP) User Guide to clarify the reporting threshold for certain liability (including Self-Insurance) Settlements, Judgment Awards, or other Payments under the provisions of the Medicare Secondary Payer Mandatory Reporting Provisions in Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, 42 U.S.C. 1395y(b)(7)&(b)(8) (the “Secondary Payer Mandatory Reporting Provisions”)

CMS announced revision to the NGHP User Guide in a February 28, 2014 CMS Alert. According to the Alert:

The current mandatory reporting threshold for liability insurance (including self-insurance) Total Payment Obligation to the Claimant (TPOC) is $2000 and over for TPOCs dated on or after October 1, 2013.
The mandatory reporting threshold for liability (including self-insurance) TPOCs dated October 1, 2014 and after is changing from $300 to $1000. If the most recent TPOC Date is on or after October 1, 2014, and the cumulative TPOC Amount is greater than $1000, the TPOC(s) must be reported no later than the end of the RRE’s submission timeframe in the quarter beginning January 1, 2015.
Error code CJ07 has not been updated to reflect this change. Further guidance will be provided at a later date about changes to this error code to coincide with the new reporting threshold of $1000.

CMS reports that these changes will also be applied to the downloadable version of the MMSEA Section 111 Coordination of Benefits Secure Website (COBSW) User Guide, available on the COBSW.

The Secondary Payer Mandatory Reporting Provisions are designed to aid CMS in enforcing rules that require that group health insurance plans and third party liability payments be treated as primary and entitle CMS to subrogate to and recover amounts paid from Medicare from these sources as well as other penalties and interest from beneficiaries, providers, plans and others. For additional information about the Secondary Payer Mandatory Reporting Provisions, see here.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

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Posted by Cynthia Marcotte Stamer

3/3 Deadline To Comment On HHS Proposed Health Plan Certification of EDI Compliance Rule

March 3, 2014

Today (March 3, 2014) is the deadline for controlling health plans (“CHPs) and other concerned parties to comment on the “Administrative Simplification: Health Plan Certification of Compliance” rule (Proposed Rule) published by the Department of Health & Human Service (HHS) on January 2, 2014. If adopted as published, CHPs would be required to prepare and file the required certification with HHS by December 15, 2015.

HHS plans to use the Proposed Rule to implement the requirement of Section 1173(h)(1)(A) of the Patient Protection and Affordable Care Act (ACA) that CHPs file a statement with HHS certifying that the health plan is in compliance with the adopted standards and operating rules for electronic transactions for Eligibility for a health plan, health care claim status, health care electronic funds transfers (EFT) and remittance advice transactions established as part of the Standards for Electronic Transactions Final Rule (ET Standards) of the Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification Requirements (the “First Certification”).

Beyond the First Certification, ACA Section 1173(h)(1)(B) separately mandates health plan certification of compliance by December 31, 2015 for the following HIPAA transactions: Health care claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, health claims attachments, and referral certification and authorization. Meanwhile ACA section 1173(h)(5) of the Act mandates that health plans meet certification of compliance requirements for later versions of the standards and operating rules.

The Proposed Rule only covers the First Certification. Guidance on the other certification rules will be separately published.

When adopted, the Proposed require that CHPs to submit the First Certification to HHS on or before December 31, 2015 certifying and demonstrating the CHPs compliance with these adopted standards and operating rules for three electronic transactions.

The following Table 1 displays the specific standards and operating rules to which the requirements for the First Certification of compliance apply.

To comply with the First Certification requirement, CHPs will have to conduct the necessary testing to be able to verify that the CHP has conducted testing and verified the health plan’s compliance with HIPAA’s electronic transactions standards for health plans concerning:

Eligibility for health plan coverage
Health care claim status
Health care electronic funds transfers (EFT) and remittance advice

The Proposed Rule proposes the requirements for certification and the penalties that will apply to a CHP that fails to comply with the certification of compliance requirements.

HHS is accepting public comments on the proposed rule through March 3, 2014.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

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Posted by Cynthia Marcotte Stamer

Statistics, OSHA Lawsuit Against AT&T Operator & Other DOL Action Highlights Rising Retaliation Exposures

February 10, 2014

A new Department of Labor (DOL) lawsuit filed in Cleveland against The Ohio Bell Telephone Company and other DOL enforcement news released today remind U.S. businesses again of the growing need to recognize and manage exposure to retaliation claims when dealing with workers who have reported injuries or other Occupational Health & Safety Act of 1974 (OSHA Laws), discrimination, wage and hour or other federal laws that include anti-retaliation or whistleblower protections.

AT&T Operator Sued Under OSHA

Filed in the U.S. District Court for the Northern District of Ohio, Eastern Division, the In the Matter of: Perez v. The Ohio Bell Telephone Company, Civil Action No. 1:14-cv-269 lawsuit charges The Ohio Bell Telephone Company, which operates as AT&T, violated the whistleblower provisions of the OSHA Laws. The complaint alleges that in 13 separate incidents, 13 employees of AT&T were disciplined and given one- to three-day unpaid suspensions for reporting injuries that occurred on the job.

OSHA enforces the whistleblower provisions of 22 statutes protecting employees who report violations of various airline, commercial motor carrier, consumer product, environmental, financial reform, food safety, motor vehicle safety, health care reform, nuclear, pipeline, public transportation agency, railroad, maritime and securities laws. These whistleblower provisions generally prohibit employers from retaliating against employees who raise concerns or provide information to their employer or the government under any of these laws.

The lawsuit illustrates the difficulty that U.S. employers increasingly face when dealing with workers who have filed complaints or participated in other protected activity under the OSHA Laws or other laws with whistleblower or anti-retaliation provisions. OSHA claims that the employer wrongfully retaliated against 13 Ohio employees who received unpaid suspensions after reporting work place injuries from 2011 to 2013. However, the company claims that the suspensions were appropriate disciple against the impacted employees for his or her violation of a workplace safety standard.

Assuming that the lawsuit proceeds without settlement, the company can expect to face expensive and lengthy litigation to determine whose perspective wins. Even if the company succeeds in winning the lawsuit, the expenses and other costs of the litigation will render any victory a financial loss.

Wage & Hour Retaliation

Along with the AT&T Operator OSHA action, DOL also is acting to enforce retaliation claims under the Fair Labor Standards Act (FLSA) and other laws enforced by its Wage and Hour Division as well as its other agencies. The Wage and Hour Division makes investigation and enforcement against employers that retaliate against workers for exercising rights protected under the FLSA or other wage and hour laws a priority. One example of this commitment to this priority is the brief the Labor Department filed in Lockheed Martin Corp. v. Administrative Review Board, where a key issue is whether substantial evidence supports the determination of the Administrative Law Judge, as as affirmed by the Administrative Review Board, that protected activity was a contributing factor in Lockheed’s constructive discharge of an employee.

Retaliation Exposure Wide-Reaching and Growing

While OSHA and the Wage and Hour Division zealously enforce the anti-retaliation provisions of the laws subject to their jurisdiction, these laws and agencies are only the tip of the iceberg. Most federal and many state labor and employment as well as a broad range of other laws include anti-relation provisions that protect workers who report potential misconduct, participate in investigaitons or engagement in other protected activity.

U.S. Government statistics show that U.S. business risk from retaliation or other whistleblower claims is significant and rising. Official statistics reported by the Equal Employment Opportunity Commission (EEOC) here show a steady rise in retaliation based charges.

Businesses or their leaders found guilty of retaliation often face significant liability. When anti-retaliation laws are enforced by the Department of Labor or other agencies, businesses generally can expect to incur both restitution and correction costs as well as administrative or civil penalties. Increasingly, employees or others reporting the claims to the agencies may receive a portion of the recovered amounts under qui tam or other similar statutes.

Damages awarded to private plaintiffs who win retaliation lawsuits also tend to be quite costly. They typically include actual damages, attorneys’ fees and other costs of enforcement as well as punitive damages. In addition to the exposures that businesses face when found guilty of illegal retaliation, many of these statutes also may impose personal liability against management or others who engage in or condone this activity. Defending these claims often proves particularly challenging because of the heavy burdens of proof that a business ormanagement official often faces when an employee or other protected party shows detriment after engaging in protected actions.

Risk Management Needed

In the face of this growing risks, businesses should recognize and take steps to monitor and manage their exposure to retaliation or other whistleblower claims. While an imperfect panacea to the rising risks of retaliation claims and liabilities, examples of some of the steps businesses generally will want to use to prevent and mitigate etaliation exposures include:

Establish and clearly communicate by word and deed that the Company prohibits retaliation. The policy should make clear retaliation is against company policy and communicate the steps that employees concerned that they are being retaliated against should take to report suspected retailiation.
Train management and other workers on the retaliation policy and hold employees that engage in illegal retailiation or other prohibited conduct through appropriate discipline.
Communicate promptly with persons reporting suspected retaliation, acknowledging the receipt of the report and that the company takes the report seriously and will investigate. At the same time, tell the whistleblower that the company does not tolerate retaliation and what to do if the whistleblower suspects retaliation.
Keep complaints confidential to reduce the risk of retaliation.
Document the report and the investigation. When possible, ask the whistleblower and other witnesses provide written statements.
Avoid forming, and teach management and others conducting or participating in the investigation to avoid forming any conclusions or making statements or other actions that could indicate that conclusions have been reached before all the facts are completed.
Use exit interviews, whistleblower hotlines and other processes to help identify and manage concerns before they turn into litigation or complaints.
Ensure that your employee hiring, promotion, compensation, demotion, termination and other practices and policies are well designed, documented and administered. Document personnel decisions consistently and fairly on an ongoing basis.
Be aware of and monitor potential retaliation exposures when conducting ongoing promotion, discharge, bonus and compensation and other day-to-day workforce actions. When an individual who has engaged in protected activity is terminated, denied a promotion or wage or experiences an event that the worker could perceive as adverse, take steps to review the action before it is finalized to identify and correct potential retaliation.
Consider getting employment practices liability coverage or other protection to provide a fund to defend claims.
Don’t overlook exposures arising from staffing or leasing arrangements, customer or vendor relationships or other third party relationships.
Seek competent legal advice and assistance with using attorney-client privilege and other rules of evidence, designing policies and practices, investigating and responding to complaints or enforcement actions and other activities.

When planning for and administering these and other compliance and risk management processes and procedures, keep in mind that the intent to retaliate generally is not required to create liability. Likewise, a business’ policy prohibiting retaliation is not an adequate shield against liability in most cases if in fact retaliation in violation of the policy occurs. Nevertheless, the efforts to prevent and mitigate retaliation are worthwhile. Not only can they prevent claims by deterring improper conduct or providing opportunities for correction and mitigation they also can help mitigate judgments and other liability in most instances.

For Assistance or More Information

If you have questions or need help with these or employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 25 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

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

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations. She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting. You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns from Ms. Stamer here.

Other Helpful Resources & Other Information

We hope that this information is useful to you. If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here . You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,” using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail by creating or updating your profile here. You can reach other recent updates and other informative publications and resources.

Recent examples of these publications include:

For important information about this communication click here.

Other Information & Resources

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 Ms. Stamer here /the Curran Tomko Tarski LLP attorneys here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information to Cstamer@CTTLegal.com or registering to participate in the distribution of these and other updates on our Solutions Law Press HR & Benefits Update distributions here. For important information concerning this communication click here. If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@SolutionsLawyer.net.

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Posted by Cynthia Marcotte Stamer

Government Contractor SCA Violation Costs It $2M & 3 Year Government Contracts Disbarrment

January 20, 2014

A nearly $2 million settlement agreement with a California-based government contractor announced January 15, 2014 by the U.S. Department of Labor Wage and Hour Division (DOL) illustrates why U.S. businesses providing goods and services directly or as subcontractors to the federal government should use care to properly compensate workers and comply with other requirements applicable to government contractors.

Lesson From Lange Trucking Inc.

According to the DOL, Lange Trucking Inc. will pay $1,979,779 in 401(k) pension benefits to 515 drivers working on U.S. Postal Service contracts to resolve DOL charges that the company violated the McNamara-O’Hara Service Contract Act by not paying drivers required fringe benefits. The settlement also debars from eligibility for any further service contracts from any U.S. government agency for three years the company, along with its President, William A. Langenhuizen; Vice President, William H. Langenhuizen; Secretary Treasurer, Antoinette Langenhuizen; Vice President, Robert Langehuizen; and Vice President of Finance, Lisa Kulak. The Wage and Hour Division reported the settlement January 15, 2013 here.

The SCA applies to every contract entered into by the United States or the District of Columbia, the principal purpose of which is to furnish services in the United States through the use of service employees. The SCA requires that contractors and subcontractors performing services on covered federal contracts in excess of $2,500 must pay their service workers no less than the wages and fringe benefits prevailing in the locality.

DOL reports that Wage and Hour investigators found that Lange Trucking failed to fully fund the drivers’ 401(k) plan, resulting in a violation of the SCA. Wage and Hour has investigated the company several times in the past. Lange Trucking paid $500,000 of the unpaid benefits while Hoovestol Inc., which is based in Eagan, Minn., acquired the company subsequent to the violations and voluntarily agreed to fund the remaining $1.48 million in benefits. Hoovestol, which cooperated fully with the Wage and Hour Division during its investigation, has also: corrected record-keeping procedures, overhauled the plan to ensure timely payments into the plan going forward, posted wage determinations at the work site and made information about the contracts accessible to employees.

Audits and Enforcement Rising

Government contractors face rising risks of audit and enforcement of their compliance with federal contracting requirements. The Obama Administration has made audit and enforcement of compliance a lead priority.

The risk of audit generally affects all federal government contractors and subcontractors. However, contractors providing services on projects funded from the $787 billion of stimulus funding provided under the American Recovery and Reinvestment Act of 2009 (“ARRA”) signed into law by President Barack Obama in February, 2009 are even more at risk. ARRA-funded contracts are subject to special procedures under the Office of Federal Contract Compliance Programs (“OFCCP”) “Procedures for Scheduling and Conducting Compliance Evaluations of American Recovery and Reinvestment Act of 2009 (ARRA) Funded Contractors” issued July 7, 2009. See OFCCP Order No. ADM 0901/SEL the “ARRA Procedures”).

Businesses providing services or supplies on ARRA funded projects directly or as subcontractors be considered government contractors, required to comply with the equal employment opportunity requirements of Executive Order 11246, as amended (EO 11246); Section 503 of the Rehabilitation Act of 1973,as amended (Section 503); and the Vietnam Veterans’ Readjustment Assistance Act of 1974, as amended, 38 U.S.C. 4212 (VEVRAA). OFCCP has made clear that it will conduct compliance evaluations and host compliance assistance events to ensure that federal contractors comply and are aware of their responsibilities under EO 11246, Section 503 and VEVRAA.

Beyond the heightened risks of enforcement due to the Obama Administration’s emphasis, government contractors and subcontractors also need to use care to monitor and maintain compliance with evolving requirements. In some cases, such as in the case of ARRA-funded projects, the applicability and requirements have been expended to extend to businesses or projects that historically might have qualified as exempt from government contractor rules.

In addition, the rules themselves are evolving in response to the regulatory and enforcement activism of the Obama Administration. In recent years, for instance, the Obama Administration has made audit and enforcement of federal disability, veterans and other nondiscrimination, affirmative action and other laws and rules for government contractors and other employers. An example of these evolving rules is reflected in the recent posting by the OFCCP of a third round of Frequently Asked Questions (FAQs) answering questions from contractors and the general public about provisions in the recently published Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act (Section 503) Final Rules. These FAQs address implementation issues, such as the schedule for contractors to come into compliance with the affirmative action requirements of Subpart C of the new regulations.

In light of these developments, government contractors and subcontractors will want to review and verify their compliance with requirements as well as the adequacy of their recordkeeping and other documentation, as well as take other appropriate steps to manage their risks.

For Assistance or More Information

Other Helpful Resources & Other Information

Recent examples of these publications include:

For important information about this communication click here.

Other Information & Resources

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 Ms. Stamer here /the Curran Tomko Tarski LLP attorneys here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here or e-mailing this information to Cstamer@CTTLegal.com or registering to participate in the distribution of these and other updates on our Solutions Law Press HR & Benefits Update distributions here. For important information concerning this communication click here. If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@SolutionsLawyer.net.

Comments Off on Government Contractor SCA Violation Costs It $2M & 3 Year Government Contracts Disbarrment | Affirmative Action, Corporate Compliance, EEOC, Employers, Government Contractors, Human Resources, OFCCP, Public Policy, Stimulus Bill | Tagged: government contractor, Labor Department, OFCCP, service contractors act, wage and hour | Permalink
Posted by Cynthia Marcotte Stamer

Rules For Reporting ACA Health Insurance Provider Information Are Out

January 20, 2014

Notice 2013-76 provides guidance on the health insurance providers fee related to (1) the time and manner for submitting Form 8963, “Report of Health Insurance Provider Information,” (2) the time and manner for notifying covered entities of their preliminary fee calculation, (3) the time and manner for submitting a corrected Form 8963 for the error correction process, and (4) the time for notifying covered entities of their final fee calculation.

The IRS published the Revenue Ruling in Internal Revenue Bulletin 2013-51 on December 16, 2013.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

For the past two years, Ms. Stamer has served as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR, FTC, USSS, FBI and state and local law enforcement on privacy, data security, health care, benefits and insurance and other matters, publishes and speaks extensively on medical and other privacy and data security, 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 publications and insights appear in the 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. For instance, Ms. Stamer for the second year will serve as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR. Her insights on HIPAA risk management and compliance frequently appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she 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. You can get more information about her HIPAA and other experience here.

If you need assistance with these or other compliance concerns, wish to inquire about arranging for compliance audit or training, or need legal representation on other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here.

You can review other recent publications and resources and additional information about the other experience of Ms. Stamer here. Examples of some recent publications that may be of interest include:

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Posted by Cynthia Marcotte Stamer

IRS: Insurers Taxed On ACA Annual Fee Assessments Collected From Customers

January 20, 2014

Insurers passing along the annual fee imposed under Section 9010 of the Patient Protection & Affordable Care Act (ACA) to customers will pay taxes on the amounts collected.

Revenue Ruling 2013-27 holds that a covered entity must include in gross income amounts it collects from policyholders to offset the cost of the annual fee imposed under ACA Section 9010. A covered entity generally is an entity engaged in the business of providing health insurance that provides health insurance for a United States health risk.

The IRS published the Revenue Ruling in Internal Revenue Bulletin 2013-51 on December 16, 2013.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

Comments Off on IRS: Insurers Taxed On ACA Annual Fee Assessments Collected From Customers | Employers, Health Plans, HIPAA, Human Resources, Insurance | Tagged: ACA, Affordable Care Act, Annual Fee, Health Plan, Insurer, Tax | Permalink
Posted by Cynthia Marcotte Stamer

2013 Cumulative List of Plan Plan Qualification Requirements Helpful Resource To Monitor Plan Updates

January 20, 2014

Want to double-check the updates might be needed to update your qualified pension or profit-sharing plan to keep its tax-qualification for the 2013 plan year? Check out Notice 2013-84.

Notice 2013-84 contains the 2013 Cumulative List of Changes in Plan Qualification Requirements (2013 Cumulative List) described in section 4 of Rev. Proc. 2007-44, 2007-2 C.B. 54. The annual list included in the Notice was published in Internal Revenue Bulletin 2013-52 on December 23, 2013.

Plan sponsors, fiduciaries and administrators, service providers and others generally will want to review their existing qualified pension and profit-sharing plans against this list to confirm that it continues to meet all qualification requirements.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

Comments Off on 2013 Cumulative List of Plan Plan Qualification Requirements Helpful Resource To Monitor Plan Updates | Employers, Health Plans, HIPAA, Human Resources, Insurance | Tagged: 401(k), defined contribution plan, Pension, plan qualification, plan qualification requirements, profit sharing, Qualified Plans, tax qualification | Permalink
Posted by Cynthia Marcotte Stamer

IRS Gives Temporary Nondiscrimination Relief For Closed Defined Benefit Plans

January 20, 2014

The Internal Revenue Service (IRS) recently granted temporary nondiscrimination relief for certain “closed” defined benefit pension plans (i.e., defined benefit plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date).

Notice 2014-05 allows certain employers that sponsor a closed defined benefit plan and a defined contribution plan to show that the aggregated plans comply with the nondiscrimination requirements of Internal Revenue Code Section 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis. The Notice also requests comments on possible permanent changes to the nondiscrimination rules under Internal Revenue Code Section 401(a)(4).

Notice 2014-was published in Internal Revenue Bulletin 2014-2 on January 6, 2014

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

For the past two years, Ms. Stamer has served as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR, FTC, USSS, FBI and state and local law enforcement on privacy, data security, health care, benefits and insurance and other matters, publishes and speaks extensively on medical and other privacy and data security, 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 publications and insights appear in the 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. For instance, Ms. Stamer for the second year will serve as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR. Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she 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. You can get more information about her HIPAA and other experience here.

If you need assistance with these or other compliance concerns, wish to ask about arranging for compliance audit or training, or need legal representation on other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here.

Comments Off on IRS Gives Temporary Nondiscrimination Relief For Closed Defined Benefit Plans | Employers, Health Plans, HIPAA, Human Resources, Insurance | Tagged: 125, 401(a)(4), cafeteria plan, closed defined benefit plan, defense of marriage act, defined benefit plan, discrimination testing, FSA, HSA, nondiscrimination, Qualified Plan, Windsor | Permalink
Posted by Cynthia Marcotte Stamer

New IRS Guidance On Claiming Small Business Health Care Tax Credit When No SHOP Enrollment Option

January 20, 2014

Notice 2014-06 provides guidance on Section 45R of the Internal Revenue Code for certain small employers that cannot offer a qualified health plan through a Small Business Health Options Program (SHOP) Exchange because the employer’s principal business address is in a county in Washington or Wisconsin in which a QHP through a SHOP Exchange will not be available for 2014. Published in Internal Revenue Bulletin 2014-2 on January 6, 2014, it provides guidance about how these employers might satisfy the requirements to qualify to claim the small business health care tax credit under Code Section 45R for the 2014 taxable year.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

Comments Off on New IRS Guidance On Claiming Small Business Health Care Tax Credit When No SHOP Enrollment Option | Employers, Health Plans, HIPAA, Human Resources, Insurance | Tagged: 125, cafeteria plan, defense of marriage act, FSA, HSA, Windsor | Permalink
Posted by Cynthia Marcotte Stamer

IRS Updates, Supplements Cafeteria Plan & HSA Post-Windsor Same-Sex Participant Guidance

January 20, 2014

Sponsoring employers and administrators of cafeteria plans now have additional guidance from the Internal Revenue Service (IRS) about when same-sex couples can be treated as spouses for purposes of Internal Revenue Code (Code) Section 125’s rules on cafeteria plans, including health and dependent care flexible spending arrangements (FSAs), and Code Section 223’s rules about health savings accounts (HSAs) following the Supreme Court decision declaring unconstitutional the Defense of Marriage Act (DOMA) in United States v. Windsor, 570 U.S. ___, 133 S. Ct. 2675 (2013). Notice 2014-01 supplements the guidance originally published by the IRS by responding to certain questions about when plan amendments may be necessary, the handling of mid-year election requests based on acquisition of a same-sex spouse and the reimbursement of medical or dependent care expenses of same-sex spouses.

Original Post-Windsor Guidance

Before the Windsor decision declared DOMA unconstitutional, Internal Revenue Service (IRS) guidance prohibited cafeteria plans, including HSAs and FSAs from treating same-sex partners as married based on DOMA’s restriction of the definition for federal tax and other federal law purposes to only a legal union between one man and one woman and the definition of “spouse” only to a person of the opposite sex who is a husband or wife. As a result, IRS pre-Winsor guidance prohibited HSAs, FSAs and other cafeteria plans from allowing employees to elect coverage of same-sex spouses on a pre-tax basis under a cafeteria plan unless the spouse otherwise qualified as a tax dependent of the employee.

In Windsor, the Supreme Court struck down DOMA’s prohibition of the recognition of same-sex couples as married or spouses as an unconstitutional violation of the Fifth Amendment to the United States Constitution.

In response to the Windsor ruling of DOMA unconstitutional, the IRS initially updated its guidance to reflect the Windsor ruling in Rev. Rul. 2013-17, which held:

For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex;
For Federal tax purposes, the IRS adopts a general rule recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages;
For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships;
Rev. Rul. 2013-17 also stated that taxpayers could rely on this holding retroactively for purposes of filing original returns, amended returns, adjusted returns, or claims for credit or refund employment tax and income tax with respectto employer-provided health coverage benefits or fringe benefits that the employer provided and are excludable from income under sections 106, 117(d), 119, 129, or 132 based on an individual’s marital status; and
For purposes of the preceding sentence, if an employee made a pre-tax salary-reduction election for health coverage under a section 125 cafeteria plan sponsored by an employer and also elected to provide health coverage for a same-sex spouse on an after-tax basis under a group health plan sponsored by that employer, an affected taxpayer may treat the amounts that were paid by the employee for the coverage of the same-sex spouse on an after-tax basis as pre-tax salary reduction amounts.

Subsequently, the IRS also published special administrative procedures for employers to use to make adjustments or claims for refund or credit of employment taxes paid with respect to the value of same-sex spousal benefits that are excludable from the income and wages of an employee under the Windsor decision, as interpreted by Rev. Rul. 2013-17.

Notice 2014-01 Supplemental Guidance

Notice 2014-01 discusses when plan sponsors may need to amend their cafeteria plan documents to allow mid-year election changes by same-sex spouses. It states that a cafeteria plan that does not contain written terms that allow changes of election upon change in legal marital status generally would need to be amended before a same-sex couple could be allowed to make an election change. However, where the cafeteria plan already contains written terms permitting a change in election upon a change in legal marital status, Notice 2014-01 states a plan amendment generally is not required to allow an employee who acquires a same-sex spouse to make a mid-year election change in response to the acquisition of a same-sex spouse.

Beyond this plan amendment guidance, Notice 2014-01 also further clarifies the IRS’ previous post-Windsor guidance by answering various questions about the treatment of same-sex couples following Windsor for purposes of administering FSA-reimbursements, HSA limits and mid-year election changes.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

Comments Off on IRS Updates, Supplements Cafeteria Plan & HSA Post-Windsor Same-Sex Participant Guidance | Employers, Health Plans, HIPAA, Human Resources, Insurance | Tagged: 125, cafeteria plan, defense of marriage act, FSA, HSA, Windsor | Permalink
Posted by Cynthia Marcotte Stamer

IRS Published Covered Compensation Table For 2014

January 20, 2014

The Internal Revenue Service (IRS) Rev. Rul. 2014-3 contains the table of covered compensation to be used for purposes of determining the covered compensation of plan participants under Section 401(l)(5)(E) of the Internal Revenue Code (the “Code”) for the 2014 plan year.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

Comments Off on IRS Published Covered Compensation Table For 2014 | Employers, Health Plans, HIPAA, Human Resources, Insurance | Tagged: Disability Insurance, Insurance, life insurance | Permalink
Posted by Cynthia Marcotte Stamer

IRS Publishes Interest Rates For Calculating Insurer Reserves Under IRC Section 807

January 20, 2014

The Internal Revenue Service recently updated the state assumed interest rates insurance companies must use to compute their reserves for (1) life insurance and supplementary total and permanent disability benefits, (2) individual annuities and pure endowments, and (3) group annuities and pure endowments for post December 31, 2012 in Revenue Ruling 2014-4. Insurers should review and update their calculations accordingly.

For Representation, Training & Other Resources

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

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Posted by Cynthia Marcotte Stamer

Dermatology Practice To Pay $150K To Settle Charges It Breached HIPAA Breach Notice Rule

December 26, 2013

A new settlement agreement announced by the Department of Health & Human Services (HHS) Office of Civil Rights (OCR) shows health plans, health care providers, health care clearinghouses and their business associates the perils of failing to properly implement the necessary policies and procedures to comply with the breach notification requirements added to the Health Insurance Portability & Accountability Act of 1996 (HIPAA) added by the Health Information Technology for Economic and Clinical Health (HITECH) Act, passed as part of American Recovery and Reinvestment Act of 2009 (ARRA).

Private dermatology practice,, Adult & Pediatric Dermatology, P.C., (APDerm) has agreed to pay $150,000 and implement a corrective action plan to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy, Security, and Breach Notification Rules. The APDerm Setttlement marks the first settlement with a covered entity for not having policies and procedures in place to address the breach notification provisions of the HITECH Act.

According to its December 26, 2013 announcement of the settlement, the Department of Health and Human Services (HHS) Office for Civil Rights (OCR) opened an investigation of APDerm upon receiving a report that an unencrypted thumb drive containing the electronic protected health information (ePHI) of approximately 2,200 individuals was stolen from a vehicle of one its staff members. The thumb drive was never recovered. The investigation revealed that APDerm had not conducted an accurate and thorough analysis of the potential risks and vulnerabilities to the confidentiality of ePHI as part of its security management process. Further, APDerm did not fully comply with requirements of the Breach Notification Rule to have in place written policies and procedures and train workforce members.

Enforcement Actions Highlight Growing HIPAA Exposures For Covered Entities

The APDerm settlement provides more evidence of the growing exposures that health care providers, health plans, health care clearinghouses and their business associates need to carefully and appropriately manage their HIPAA responsibilities. See HIPAA Heats Up: HITECH Act Changes Take Effect & OCR Begins Posting Names, Other Details Of Unsecured PHI Breach Reports On Website. It joins the growing list of settlement or resolution agreements under HIPAA announced by OCR.

The APDerm also is notable both as it settles the first ever charges against a covered entity for failing to adopt required Breach Notification policies and procedures and the relatively most settlement payment required in comparison to other announced settlement. Other settlements have been significantly higher. For instance, OCR required that Blue Cross Blue Shield of Tennessee (BCBST) to pay $1.5 million to resolve HIPAA violations charges.

In response to these expanding exposures, all covered entities and their business associates should review critically and carefully the adequacy of their current HIPAA Privacy and Security compliance policies, monitoring, training, breach notification and other practices taking into consideration OCR’s audit, investigation and enforcement actions, emerging litigation and other enforcement data, their own and reports of other security and privacy breaches and near misses, evolving rules and technology, and other developments to determine if additional steps are necessary or advisable. For tips, see here.

For Representation, Training & Other Resources

If you need assistance monitoring HIPAA and other health and health plan related regulatory policy or enforcement developments, or to review or respond to these or other health care or health IT related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, 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 and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.

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Posted by Cynthia Marcotte Stamer

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

December 26, 2013

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

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

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Posted by Cynthia Marcotte Stamer

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

December 26, 2013

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

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

For Assistance or More Information

Other Helpful Resources & Other Information

Recent examples of these publications include:

For important information about this communication click here.

Comments Off on OFCCP Posts Additional FAQs on the Implementation of the VEVRAA and Section 503 Final Rules | 105(h), ADA, Affirmative Action, Affordable Care Act, Corporate Compliance, Disability, EEOC, EEOC, Employers, Employment Tax, ERISA, Government Contractors, Health Plans, HIPAA, Human Resources, Insurance, Labor Management Relations, Military Leave, OFCCP, Rehabilitation Act, Retaliation, Safety, Unemployment Benefits, Unemployment Insurance | Tagged: Employer, Military Leave, Veterans Righs | Permalink
Posted by Cynthia Marcotte Stamer

Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification

December 26, 2013

Health Care Reform Adds Fuel To Enforcement Fire

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

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

Wang’s Partner Inc. Suit

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

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

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

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

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

FLSA Violations Generally Costly; Enforcement Rising

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

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

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

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

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

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

Health Care Reform Adds Risks, Fuels More Enforcement

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

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

Employers Should Strengthen Practices For Defensibility

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

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

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

For Help With Investigations, Policy Updates Or Other Needs

If you need help in conducting a risk assessment of or responding to an IRS, DOL, Justice Department, or other federal or state agencies or other private plaintiff or other legal challenges to your organization’s existing workforce classification or other labor and employment, compliance, employee benefit or compensation practices, please contact the author of this update, attorney Cynthia Marcotte Stamer here or at (469) 767-8872 .

Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, management attorney and consultant Ms. Stamer is nationally and internationally recognized for more than 23 years of work helping employers; employee benefit plans and their sponsors, administrators, fiduciaries; employee leasing, recruiting, staffing and other professional employment organizations; and others design, administer and defend innovative workforce, compensation, employee benefit and management policies and practices. The Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Committee, a Council Representative on the ABA Joint Committee on Employee Benefits, Government Affairs Committee Legislative Chair for the Dallas Human Resources Management Association, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer often has worked, extensively on these and other workforce and performance related matters. She also is recognized for her publications, industry leadership, workshops and presentations on these and other human resources concerns and regularly speaks and conducts training on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, and many other national and local publications. For more information about Ms. Stamer and her experience or to get access to other publications by Ms. Stamer see here or contact Ms. Stamer directly.

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Posted by Cynthia Marcotte Stamer

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

December 26, 2013

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

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

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

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

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Posted by Cynthia Marcotte Stamer

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

December 26, 2013

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

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

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

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

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

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

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

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

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

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

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

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Posted by Cynthia Marcotte Stamer

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

December 26, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Speak Up On The Proposed Changes

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

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Posted by Cynthia Marcotte Stamer

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

December 24, 2013

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

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

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

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

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

The best opportunity to improve access to quality, affordable health care for all Americans is for every American, and every employer, insurer, and community organization to seize the opportunity to be good Samaritans. The government, health care providers, insurers and community organizations can help by providing education and resources to make understanding and dealing with the realities of illness, disability or aging easier for a patient and their family, the affected employers and others. At the end of the day, however, caring for people requires the human touch. Americans can best improve health care by not waiting for someone else to step up: Step up and help bridge the gap when you or your organization can. Speak up to help communicate and facilitate when you can. Building health care neighborhoods filled with good neighbors throughout the community is the key.

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

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

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Posted by Cynthia Marcotte Stamer

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

December 14, 2013

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

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

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

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

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

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

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

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Posted by Cynthia Marcotte Stamer

IRS Provides Closed DB Plan Relief, Qualified Plan Changes List & In-Plan Roth Rollovers Guidance

December 13, 2013

With 2013 rushing to the close, the Internal Revenue Service (IRS) has issued guidance providing nondiscrimination relief for certain defined benefit plans is providing temporary nondiscrimination relief for some defined benefit plans, its annual list of qualified plan changes, and guidance about in-plan Roth rollovers,.

DB Plan Discrimination Rule Relief

Notice 2014-05 provides temporary nondiscrimination relief for certain “closed” defined benefit pension plans (i.e., defined benefit plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date). The Notice allows some employers that sponsor a closed defined benefit plan and a defined contribution plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of § 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis. The notice also requests comments on possible permanent changes to the nondiscrimination rules under § 401(a)(4).

Plan sponsors and administrators of plans that may benefit from this relief should consult with qualified legal or tax counsel for assistance in understanding the potential applicability and implications of the guidance.

In Plan Roth Rollover Guidance

Notice 2013-74 provides guidance on in-plan Roth rollovers, the practitioner community is looking forward to this guidance.

Notice 2013-84 contains the 2013 Cumulative List of Changes in Plan Qualification Requirements (2013 Cumulative List) described in section 4 of Rev. Proc. 2007-44, 2007-2 C.B. 54.

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Posted by Cynthia Marcotte Stamer

Report Documents Disappointing Lag In American Use of ACA Health Insurance Exchanges Despite Administration’s Positive Spin Efforts

December 12, 2013

Despite administration efforts to put a positive spin on the data, federal and state Health Insurance Exchange (Exchange) enrollment and other statistics through November 30, 2013 announced by Health and Human Services (HHS) Secretary Kathleen Sebelius on December 11, 2013 confirm that enrollment through the Exchange continues to lag well behind projections by the Administration.

In the Health Insurance Marketplace: December Enrollment Report released November 11, 2013, HHS reveals important statistics about the number of Americans who have used the federal or state Health Insurance Exchanges established under the Patient Protection and Affordable Care Act (ACA) with the expectation that they would be used by millions of Americans by January 1, 2014 to enroll in health insurance coverage subject to ACA reforms to enroll in health coverage. The Re Report features cumulative data for the two month period because some people apply, shop, and select a plan across monthly reporting periods. These counts avoid potential duplication associated with monthly reporting. For example, if a person submitted an application in October, and then selected a Marketplace plan in November, this person would only be counted once in the cumulative data.

Under ACA, HHS was charged with implementing a federal Exchange for use by Americans and certain federal employees and residents of the District of Colombia as well as citizens in states not electing to establish their own state Exchanges to compare and apply for enrollment in health insurance coverage meeting the essential health benefit and other mandates of ACA.
Although ACA called for Exchange enrollment for individuals and employees of small businesses electing to offer employee coverage through the Exchange to begin November 1, 2013 for ACA-compliant coverage scheduled to take effect on January 1, 2014, functionality, security and other problems revealed in connection with the opening of the federal Exchange in October and issues in the performance of certain state Exchanges have plagued the enrollment process and subjected HHS generally and Secretary Sebelius to significant criticism. In response to that criticism, the Obama Administration was forced to extend the enrollment deadline for individual Americans to apply for 2014 coverage through the federal Exchange, cancel online enrollment in the federal Exchange for employees of small businesses and to launch a major campaign that it promised would “fix” other issues in the functionality of the Exchange by November 30, 2013.

The Report confirms Americans are not embracing or using the Exchanges anywhere close to the projections predicted by the Obama Administration and other supporters of ACA to evaluate their health insurance coverage choices much less to enroll in health coverage redesigned to meet the mandates of ACA. The Report groups findings by state and federal marketplaces. In some cases only partial datasets were available for state marketplaces.

The Report reveals a disappointing lack of delivery on the promise of ACA supporters that millions of Americans would flock to use the Exchanges to enroll in the coverage options offered by health insurers participating in the Exchanges. Among other things, the Report reveals that between October 1 and November 30, 2013:

1.9 million Americans reportedly successfully completed the eligibility process and were determined eligible to enroll but have not yet selected a plan;
803,077 Americans were determined or assessed eligible for Medicaid or the Children’s Health Insurance Program (CHIP) in October and November by the Marketplace;
39.1 million visitors visited the state and federal Exchange sites; and
HHS estimates that approximately 5.2 million calls were received by the state and federal call centers; but
Only 364,682 Americans selected plans from the state and federal Marketplaces.

While it remains unclear whether technical problems, disappointment by Americans in the cost, benefit options and other aspects of the ACA-reformed coverage, or other factors account for huge gap between the promised and realized performance of the Exchanges in delivering on their promise to provide reliable, efficient, accessible tools to enable millions of Americans to enroll in health insurance coverage options. See, e.g., Some state insurance exchanges continue to battle technical problems; Obamacare technical problems plague health market; ACA Watch – Exchange technical issues may lead to direct enrollment. While technical issues clearly impacted enrollment, ACA detractors also point to survey’s showing growing public dissatisfaction over higher than expected costs, limitations of coverage choices, privacy and other concerns.

Despite the disappointing numbers and continuing reports of issues in the functionality and security of the federal Exchange and state Exchanges, Secretary Sebelius sought to put a positive spin on the data. “Evidence of the technical improvements to HealthCare.gov can be seen in the enrollment numbers. More and more Americans are finding that quality, affordable coverage is within reach and that they’ll no longer need to worry about barriers they may have faced in the past – like being denied coverage because of a pre-existing condition,” Secretary Kathleen Sebelius said.

It remains to be seen if the claimed fixes in the technology will turn around the lagging enrollment and decline in public support reflected in recent surveys.

For Assistance or More Information

If you have questions or need help with 2014 health plan decision-making or preparation, or with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

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Posted by Cynthia Marcotte Stamer

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

December 10, 2013

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

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

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

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

For Assistance or More Information

If you have questions or need help with these or 2014 health plan decision-making or preparation, or with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

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Posted by Cynthia Marcotte Stamer

2014 Standard Mileage Rates Announced

December 10, 2013

Businesses should review the updated optional standard mileage rates and maximum standard automobile costs for purposes of claiming certain automobile allowances during 2014 recently released by the Internal Revenue Service (IRS) to determine and make the necessary arrangements to communicate and implement any changes in the rates that their business plans to use to reimburse employees and others for mileage.

Notice 2013-80, which is scheduled for official publication in Internal Revenue Bulletin 2013-52 on December 23, 2013, provides the optional 2014 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes. This notice also provides the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate (FAVR) plan. The IRS released an advanced copy of the Notice on December 6, 2013.

Many businesses reimburse employees and other service providers for mileage and other automobile expenses under policies that use these IRS standard rates to calculate the reimbursement amounts. Reimbursement of employees based on these rate is not required. Because reimbursements in excess of the standard rates can create income tax recordkeeping and reporting challenges for the employer, the employee or both, however, most businesses use standard mileage reimbursement rates set at or below the IRS optional standard rates. Businesses facing financial or other challenges may want to reevaluate whether to continue to reimburse mileage and if so, the rate of reimbursement to use to do so.

When communicating with employees about the businesses’ policies for reimbursing business and moving expense mileage, businesses should take care to ensure that employees understand differences in the mileage reimbursement rates that apply to different categories of expenses. As an added service to employees, many human resources departments also may want to consider alerting employees to consult their tax advisor or take other steps to properly understand and retain documentation of mileage not only for business expense reimbursement, but also medical and moving purposes. The availability of this information can be helpful to empower workers and their families to understand and take proper advantage of rules for deducting these expenses even when the employer or its health plan does not reimburse the employee for the expenses.

In addition to reimbursements for workers, businesses also should consider the potential effects of the adjustments in the IRS optional standard mileage rates on the amounts they may bill their customers for mileage expenses as well as the amount that they should expect that their vendors and service providers may bill the business for mileage expenses under contracts that provide for reimbursement of those expenses. Businesses whose contracts with vendors or customers provide for reimbursement of mileage expenses using rates based on the IRS’ optional standard mileage rates should evaluate the effect of the announced adjustments on those mileage obligations to ensure that mileage expenses are properly anticipated, billed and paid.

For Assistance or More Information

If reviewing or negotiating your vendor agreements, or with other 2014 health plan decision-making or preparation, or with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

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Posted by Cynthia Marcotte Stamer

US Labor Department Seeks $300K+ Whistleblower Recovery Against Employer For Firing Worker

October 29, 2013

Clearwater Paper Corp is facing a Department of Labor lawsuit after firing an employee who raised

A whistleblower lawsuit against Clearwater Paper Corp reminds employers dealing with workplace safety and health complaints need to use care to manage potential retaliation claims by complaining workers.

The U.S. Department of Labor whistleblower complaint in the U.S. District Court for the District of Idaho against Clearwater Paper Corp. in Lewiston, Idaho, alleges the company illegally retaliated against an employee who raised workplace safety and health concerns. The Labor Department’s complaint charges that a Clearwater Paper fired an employee in 2010 in retaliation for filing a safety complaint with the Occupational Safety and Health Administration (OSHA). The employee was first suspended and then fired soon after OSHA conducted an inspection to assess excessive exposure to red cedar dust at Clearwater Paper’s sawmill in Lewiston. This facility was later sold in 2011. The Department seeks reinstatement of the employee as well as payment of more than $300,000 in damages and fees, including back pay, compensatory damages, emotional distress damages and punitive damages.

The Occupational Health and Safety Act (OSH Act) and most state occupational health and safety laws include provisions that prohibit retaliation against workers for making safety complaints or exercising other rights. OSHA enforces the whistleblower provision of the OSH Act and 21 other statutes protecting employees who report violations of various securities, trucking, airline, nuclear, pipeline, environmental, public transportation, workplace safety and health, consumer product safety, health care reform and financial reform laws. Under these laws, employers are prohibited from retaliating against employees who raise various protected concerns or provide protected information to the employer or to the government.

The protections and remedies for retaliation against whistleblowers reporting health and safety concerns are just one type of employee action that can trigger whistleblower or other retaliation protections under federal or state law. Even when the complaint or report made by worker proves unfounded, good faith reports can trigger the whistleblower protections of most of these statutes. Since the protections tend to follow the worker throughout his or her career with an employer, employers need to carefully document these reports and use care to monitor for improper retaliation risks or exposures. If improperly managed, the whistleblower or other retaliation complaints can create significant risks for dealing with a employee who has reported health and safety concerns or engaged in other protected activities. Employers disciplining or terminating these workers need to be prepared to defend against a potential whistleblower claim by providing sufficient documentation and other evidence to prove a valid business reason, rather than retaliation, lead to the adverse job action. Typically this should begin by establishing and administered consistent, well-documented practices for documenting performance and discipline for all employees not those who have made safety reports or engaged in other action that could provide a basis for a whistleblower complaint. While reviewing job discipline and terminations for potential whistleblower or other illegal bias also is a good practice, employers should use caution when conducting performance reviews or other performance or discipline activities with respect to safety or other potential whistleblowers to avoid the appearance of singling out the whistleblower for special scrutiny or heightened standards as this conduct could itself be used as potential evidence of illegal retaliation.

For Help or More Information

If you need help understanding or dealing with reviewing or negotiating your vendor agreements, or with other 2014 health plan decision-making or preparation, or with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

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Posted by Cynthia Marcotte Stamer

Careful Selection & Contracting With Vendors Critical Part of Health Plan Renewals

October 8, 2013

In the rush to finalize their health plan designs, contracts and documents for the upcoming 2014 plan year, employer and other health plan sponsors and fiduciaries should use care to review their insurance, broker, administrator and other health plan vendor agreements and vendor-provided plan documents, communications and processes to verify that vendor agreements and the plan designs, documentation, communications and processes they put in place appropriately hold service providers accountable, are legally compliant, appropriately tailored to defensably administer the plan in accordance with expectations, implement appropriate fiduciary and other performance and risk allocations and manage other exposures.

Many employer and other plan sponsors unknowingly expose themselves and management personnel participating in plan related decision-making to liability and costs by allowing costs or personality preferences to guide their vendor choices, rather than conducting a well-documented prudent review of their brokers and consultants, health plan insurers and other service providers, their bonding and other credentials, and the vendor-recommended plan designs, documentation, communications, credentials and processes.

Careful Vendor Selection & Contracting Foundation of Health Plan Compliance & Risk Management

As an initial matter, employers or others selecting plan vendors generally need to credential service providers to manage exposures under the fiduciary responsibility rules of the Employee Retirement Income Security Act of 1974 (ERISA). The fiduciary responsibility rules of ERISA generally impose upon the employer, member of its management or other parties possessing or exercising discretionary authority or control over the selection of plan service providers or vendors legal responsibility for the prudent selection and oversight of the service providers, their bonding and other credentials. Failing to conduct and keep documentation of this critical review can expose those participating in the vendor selection process to personal liability if plan funds or administration are mishandled as a result of the improper selection and oversight of the vendor.

Second, even when a vendor has a great reputation and credentials, employers or others also should carefully review the plan documentation, agreements, and communications provided by their brokers, administrative services providers, insurers and other health plan service providers to confirm that these materials are legally compliant, properly reflect the plan sponsors’ expectations about the plan terms, costs, and obligations, and otherwise designed to protect the employer’s goals and interests. While most plan sponsors and their management assume that the arrangements put in place by their broker, consultant or other service provider will take the necessary steps to properly document and implement the plan design, inadequacies in plan documentation, communications, administrative forms, processes and even plan design are common.

Even where plan vendors and advisors have the best of intentions, plan designs and documentation often fail to comply with applicable federal mandates, incorporate undesirable terms, or incorporate other provisions or deficiencies that unnecessarily leave the plan sponsor or members of its management exposed to avoidable fiduciary responsibility and liability for actions that the service provider is being paid to perform, exculpate vendors from liability for failing to competently perform responsibilities, expose the plan or its sponsors to unnecessary penalties or other costs, have other weaknesses that leave the sponsor or its management exposed to significant costs, liabilities or both.

For these reasons and others, employer and other plan sponsors should make time to conduct a well-documented documented review of the fiduciary eligibility, bonding and other credentials, services agreements, plan documentation, communications, processes, and procedures proposed by their health plan vendors before finalizing vendor selections and implementing those documents.

Credentialing & Vendor Contracting Tips

To help determine the scope of review and risk, most employer or other plan sponsors and their management will find it helpful to begin by critically evaluating the credentials and contracts of the health plan brokers, consultants and service providers. This review should both verify these advisors have the bonding and other legal credentials to qualify to perform the role desired under ERISA, the scope of services and accountability undertaken by the service providers, and the responsibilities for which the employer or other appointing party will continue to bear for the proper documentation and administration of the plan after hiring these vendors.

The following are some basic guidelines that management or others making health plan vendor and design decisions generally will want to consider and document as part of their analysis when reviewing proposed health plan vendors and the plan designs, documentation, communications and procedures.

A formal background check performed with the consent of the service provider should prove that the service provider and all of its employees and agents should be qualified to serve in a fiduciary role, are not disqualified or under investigation or other action that would disqualify them to act as a fiduciary or be bonded as required by ERISA, have no material complaint or dispute history with current or former clients or vendors, the Department of Labor, Department of Insurance, Internal Revenue Service or other relevant authorities, and have appropriate licensure, certifications, experience and reputation.
The service provider and its employees should enjoy an excellent reputation, verified by both broad background checks and detailed reference checks with both current and former clients, including clients who are not necessarily on the official reference list provided by the prospective service provider.
The service provider, its team, processes and procedures should have a history and currently be financially and operationally sound with significant experience and ability in the area.
The service provider should possess and be able to provide appropriate documentation of licensure, bonding, certifications and other credentials.
Due diligence should verify that the service provider has the skill, equipment, staff, procedures, processes, qualifications and other capabilities to properly and reliably perform the tasks contemplated prudently and in accordance with applicable legal responsibilities.

Beyond credentialing the service provider and its personnel, a plan sponsor or other party participating in the selection of a service provider or its recommended plan designs or services also should critically review the proposed services agreement to verify that it properly protects the expectations and interests of the plan sponsor, its plan fiduciaries and other associated parties participating in the plan design and vendor selection process. Among other things, a review of the contract generally should verify that the following criteria are met:

The contract should clearly document the scope of plan services that the service provider will provide under the agreement, the services that the service provider will not provide, and the services that the service provider only will provide at an additional charge, all charges and other requirements, and any other material expectations.
The contract should require the service provider to deliver plan services prudently in a manner that delivers the desired health benefits in a manner consistent with the purposes that justify the plan sponsor’s continued provision of the health benefits in accordance with the legal, operational, benefit and cost parameters applicable to the employer and its plan
The contract should provide plan services in a manner consistent with the plan sponsor’s overall plan design and related business practices.
The contract should deliver plan services in a manner consistent with the federal and state tax, labor, health care, contractual and other legal obligations applicable to the plan sponsor.
The contract should document the bonding, liability insurance, credentials and other qualifications of the service provider and require notification and appropriate recourse in the event of a material change in those credentials.
The contract should adequately minimize the exposure of the plan sponsor to legal liabilities arising from its participation in the contract, including fiduciary liability, vicarious liability, corporate negligence, and contractual liability.
The contract should establish and document the framework for an effective working relationship.
The contract should establish and document clear performance obligations applicable to the parties; the way compliance will be measured; and the consequences of any breach of those obligations.
The contract should incorporate the necessary provisions to fulfill the business associate agreement and other requirements concerning the creation, use, protection, access and disclosure of personal health information and other sensitive information about plan participants, beneficiaries and their costs needed to comply with the privacy and data security requirements of the Health Insurance Portability & Accountability Act privacy, security, breach notification, accounting and other individual rights, and business associate rules as updated in new regulations published in 2013 by the Office of Civil Rights.
The contract should provide access to necessary information including all records necessary to monitor and defend the plan, its design and administration, its compliance and prudent administration, including all disclosure, audit and reporting requirements.
The contract should define the breach notification and dispute resolution procedures, if any, that apply to disputes between the parties in a manner that does not unduly prejudice the plan sponsor’s ability to administer the plan; fulfill its legal obligations to covered persons and relevant regulators, or conduct other business activities.
The contract should clearly document the relationship between the standard plan provisions and the managed care procedures as well as fiduciary responsibility and accountability for, appropriately updated to comply with updated claims, appeals, and independent review organization requirements implemented since the enactment of the Patient Protection & Affordable Care Act, This should include a discussion regarding the extent to which the plan’s standard utilization, precertification, and medical necessity review procedures, coverage limitations and exclusions, proof of loss, and other provisions or replaced for care obtained under the managed care plan, as well as procedures and liability for deficiencies in administration resulting in liability to contracted physicians under managed care contracts pursuant to state law, loss of discounts, penalties or stop-loss coverage resulting from errors in administration and other federal and state liability risks of the plan, its fiduciaries and the employer.
The contract should require a third party administrator (TPA_ ensure that its provider contracts do not contain terms or provisions (other than as intended by the plan sponsor) that would undermine the enforceability of the plan sponsor’s benefit design.
The contract should require the service provider to ensure that contracting providers understand that their entitlement to payment or benefits depends upon satisfaction of all applicable terms and conditions of the plan and incorporate procedures to ensure the enforceability of these commitments.
The contract should bind the service provider to change its procedures in response to changes in the law or regulations that may be adopted from time to time.
The contract, if applicable, should require prudent processes to verify eligibility, coordinate coverage and perform other required functions.
The contract should include terms that preserve the subrogation rights of the plan.
The contract should require the TPA to warrant its authority to bind contracting providers and other parties whose cooperation and performance is required under the contract as part of the package of services to be delivered under the TPA’s proposal.
The contract should require the service provider to warrant that its agreement with other contracting providers does not conflict with the terms of the contract and ensures that these related providers are bound to perform in the manner contemplated by the contract.
The contract should require the service provider to perform all duties to prudently and in accordance with the law and hold the service provider legally accountable for liabilities and costs resulting from its omission to do so.
The contract should incorporate all performance guarantees including suitable accountability for noncompliance.
The contract should keep the right of the plan sponsor or fiduciary to terminate the vendor where prudent or otherwise legally required to fulfill responsibilities without inappropriate restrictions inconsistent with legal or operational responsibilities.
The contract should require appropriate indemnification or other accountability for non-performance with legal or other requirements and expectations.
The contract should include appropriate provisions to preserve access to plan administration and associated data as necessary to monitor plan costs, make future design decisions, and administer the plan and associated responsibilities even in the event of a termination of the vendor relationship.

While the credentialing questions and processes don’t eliminate all health plan related risks, they can help eliminate and manage many common legal and operational risks that often arising from health contracts and can help position an employer and members of its management to mitigate other potential exposures. The benefits of this careful credentialing and contract should be carried forward by careful crafting of plan documents and communications to match the allocations of responsibilities decided upon in the contracting process, the use of appropriate procedures to ensure that the appointed party handles those responsibilities and their associated communications, and the proper coordination of responses to potential problems in a manner that provides for defensible administration without blurring carefully crafted fiduciary and other role assignments.

In some instances, it may not be possible to secure the ideal contractual provisions. When this occurs, the documentation of the negotiations and the analysis of the advisability of proceeding with the contract, including any prudent backup arrangements needed to justify continuation should be maintained. Too often, brokers and consultants disparage contract negotiation and review recommendations of legal counsel by suggesting this is standard in the industry or that the request for negotiation and review suggests some lack of experience or other improper expectation by legal counsel or others suggesting the review. Such suggestions should be carefully scrutinized. While ideal provisions cannot always be obtained, it is rare that some improvement in the agreements is not possible. Even where this progress is not obtained, however, existing judicial and Labor Department enforcement clearly shows that the process of prudent review and analysis of proposed vendors and services is a required and necessary element of the vendor selection process for which parties making the decisions may face liability if they cannot prove the selection or retention was prudently conducted.

For Help or More Information

Other Helpful Resources & Other Information

Recent examples of these publications include:

For important information about this communication click here.

Comments Off on Careful Selection & Contracting With Vendors Critical Part of Health Plan Renewals | Employee Benefits, Employers, Health Plans, HIPAA, Human Resources, Patient Protection and Affordable Care Act | Tagged: Data Security, Fiduciary Liability, Health Care Reform, Health Insurance, Health Insurance Exchange, Health Insursance Marketplace, Health Plans, health reform, Helath Care Providers, HHS, HIE, HIPAA, Obama Care, Obamacare, OIG, Patient Protection & Affordable Care Act, Privacy, Risk Management, Vendor Contracting | Permalink
Posted by Cynthia Marcotte Stamer

Exchange Enrollment Kicks Off Plagued By Government Shutdown, Other Challenges

October 1, 2013

Despite a showdown in Congress about health care reform’s future that threatens to bring funding of the U.S. government to a halt and a host of recent security and other concerns about the security and operational readiness of its enrollment platform and details of the implementation of the marketplaces in many states that will provide the offered coverage, the Obama Administration is touting today, October 1, 2013, as the first day that Americans can apply for enrollment in coverage offered through the health insurance exchanges that the Obama Administration prefers to refer to as “Marketplaces” slated to take effect under the Patient Protection & Affordable Care Act (ACA).

Obama Administration Touts October 1 Kickoff As New Age of Health Care

In a post shared across social media today,U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announces, ” HealthCare.gov is open for business. Share this and let your friends and family know they can #GetCovered today at www.healthcare.gov!” In yet another post, Ms. Sebelius proclaims: See also http://www.hhs.gov/news/press/2013pres/10/20131001a.html.

“For the first time ever, today all Americans can begin shopping for quality health coverage that is affordable, and not be denied or charged more because they have a pre-existing condition.

The Health Insurance Marketplace is a new, simpler way for uninsured Americans and their families to purchase health insurance in one place. Coverage begins as early as January 1, 2014 for people enrolling by December 15, 2013. Today also marks the kick-off of outreach and enrollment activities in communities nationwide. Enrollment events will take place in a variety of local settings including public libraries, churches, festivals, sports events, and community meetings.”

Shutdown, Other Issues Raise Concerns

Ironically, while HHS continues to cheer its actions to implement ACA, a host of concerns cloud its implementation, including a federal government shutdown that also took effect October 1, 2013 as a result of a Congressional battle over the future of ACA and its funding. Over the weekend, the Senate refused to approve legislation passed by the House that would have provided for continued funding of U.S. government activities while denying funding and delaying provisions of ACA. Leaders in the Republican controlled House have indicated the House will not pass a budget without the carve out of funding and delay of ACA implementation. The dispute means that Congress has not approved continuing funding from the U.S. budget of the monies necessary for continued operations of many government functions, including HHS support for implementation of ACA and its enrollment. As a result, while HHS continues to bombard the media and social media with announcements touting enrollment, the main page of its website posts the following announcement in bright red text:

“Due to the lapse in government funding, only web sites supporting excepted functions will be updated unless otherwise funded. As a result, the information on this website may not be up to date, the transactions submitted via the website may not be processed, and the agency may not be able to respond to inquiries until appropriations are enacted. …

ATTENTION – HIGH VOLUME OF MEDIA REQUESTS

We are experiencing a high volume of media requests about the Affordable Care Act and the Health Insurance Marketplaces. If you are a reporter, we have assembled these tools to help you:

First try HealthCare.gov, which has comprehensive information about the Health Insurance Marketplace here.
At the start of Open Enrollment, watch for media advisories for the Centers for Medicare & Medicaid Services’ regular operational updates for reporters. The first update will be held as a conference call on the afternoon of Oct. 1. HHS will post transcripts of these briefings in the HHS Newsroom.
Email our media team here. If you have already contacted CMS’ media relations team, then HHS already has your request, and there is no need to email both agencies. Please be as specific as possible about your request and deadline.”

Beyond the government shutdown, other issues remain. Last month, HHS released a HHS Office of Inspector General Report that raises concerns about the adequacy of the electronic security of the portal that will be used to register and apply for enrollment through the site. See Observations Noted During The OIG Review Of CMS’s Implementation Of The Health Insurance Exchange—Data Services Hub. A host of other problems and concerns also have been reported. See e.g., Obamacare’s Insurance Exchange “Glitches” – The Foundry; Document Management Problems in New Insurance Markets Feds … ; ObamaCare ‘glitch‘ watch: Exchange site posts error messages; D.C.’s Obamacare fail: Prices won’t work until November; ObamaCare’s scope, rocky intro signals problems for Tuesday’s start.

As the January 1, 2014 promised commencement of coverage and individual mandates loomed, the Obama Administration’s delay of employer mandates while leaving individual mandate penalties against individuals who fail to purchase coverage, reports of employers cutting jobs, employee health coverage, or both, highly debated concerns about the cost, quality of coverage and other issues are fueling a showdown again in Congress, as many Americans grow increasingly concerned about what lies ahead.Are you concerned about whether health care reform preparations are on track or have other health care policy concerns. With the debate continuing to rage, many individuals and employers are watching carefully, as the debate holds funding of other key aspects of government operations hostage.

Join the discussion about health care reform and share your input by joining Project COPE: Coalition for Patient Empowerment here.

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

Other Helpful Resources & Other Information

Recent examples of these publications include:

For important information about this communication click here.

Comments Off on Exchange Enrollment Kicks Off Plagued By Government Shutdown, Other Challenges | Employee Benefits, Employers, Health Plans, HIPAA, Human Resources, Patient Protection and Affordable Care Act | Tagged: Data Security, Health Care Reform, Health Insurance Exchange, Health Insursance Marketplace, Health Plans, Helath Care Providers, HHS, HIE, HIPAA, Obama Care, Obamacare, OIG, Patient Protection & Affordable Care Act, Privacy | Permalink
Posted by Cynthia Marcotte Stamer

Affordable Care Act Requires Proper Integration of HRAs, HFSAs, & Certain Other Health Premium Reimbursement Arrangements

September 24, 2013

Employers using health reimbursement arrangements (HRAs), health flexible spending plans (HFSAs) or other employer payment plan arrangements under which the employer provides a fixed defined contribution from the employer to employees to use to purchase individual or group health insurance should have those arrangements reviewed for compliance with the Patient Protection & Affordable Care Act (ACA) annual limit and preventive care rules as interpreted by the Departments of Labor, Treasury and Health & Human Service.

The Internal Revenue Service and the Employee Benefit Security Administration construe ACA as requiring that these arrangements be properly integrated with health insurance coverage that otherwise complies with the Affordable Care Act’s annual limit and preventive care rules to avoid violating ACA in recent guidance published in IRS Notice 2013-54 and EBSA Technical Release No. 2013-04.

Employers that use HRAs, HFSAs, or other employer defined contribution style arrangements to reimburse employees for individual or group insurance coverage should review their arrangements to ensure that they are properly designed to comply with ACA’s annual limit, preventive care and other mandates.

For Help or More Information

If you need help understanding or dealing with these impending notification requirements, with other 2014 health plan decision-making or preparation, or with reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte Stamer.

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

Other Resources

If you found this of interest, you may also be interested in the following recent publications by Ms. Stamer published by Solutions Law Press, Inc.:

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

Comments Off on Affordable Care Act Requires Proper Integration of HRAs, HFSAs, & Certain Other Health Premium Reimbursement Arrangements | Employee Benefits, Employers, ERISA, family leave, Fiduciary Responsibility, Health Plans, Human Resources, Insurance, Leave, Patient Protection and Affordable Care Act, Uncategorized, Wage & Hour | Tagged: Affordable Care Act, DOMA, Employee Benefits, ERISA, Exchange Notice, FMLA, Health Plans, Model NOtices, same-sex marriage, Section 18B, Windsor | Permalink
Posted by Cynthia Marcotte Stamer

Clearwater Paper Corp is facing a Department of Labor lawsuit after firing an employee who raised

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