Month: June 2004

The IRS has issued yet additional guidance smoothing the path for taxpayers who want to avail themselves of the new health savings accounts (“HSAs”). The guidance is Notice 2004-43 which addresses the road-block of state-law mandates, and provides for a transition period as follows:

Several states currently require that health plans provide certain benefits without regard to a deductible or with a deductible below the minimum annual deductible requirements of section 223(c)(2) (e.g., first-dollar coverage or coverage with a low deductible). These health plans are not HDHPs [High Deductible Health Plans] under section 223(c)(2) and individuals covered under these health plans are not eligible to contribute to HSAs. Because of the short period between the enactment of HSAs and the effective date of section 223, these states have had insufficient time to modify their laws to conform to the standards of section 223. Thus, it is appropriate to provide transition relief that treats HDHPs as qualifying under section 223(c)(2) when the sole reason the plans are not HDHPs is because of state-mandated benefits. During the transition period, otherwise eligible individuals covered under these plans will be treated as eligible individuals for purposes of section 223(c)(1) and may contribute to an HSA.

The transition relief runs out on January 1, 2006, and will not apply to state mandates that were not in effect on January 1, 2004.

Previous post on the subject: “Health Savings Accounts and the Barrier of State Mandates.”

Some of you may remember a post here at Benefitsblog last October entitled “ERISA preemption: a “Serbonian Bog” in which Judge Becker’s concurring opinion in the case of DeFelice v. Aetna was highlighted. It is interesting to note that Justice Ginsburg (joined by Justice Breyer) issued a concurring opinion in the Aetna Health Inc. v. Davila case decided yesterday by the U.S. Supreme Court (previous posts here and here), in which she refers to Judge Becker’s concurring opinion as follows:

The Court today holds that the claims respondents asserted under Texas law are totally preempted by §502(a) of the Employee Retirement Income Security Act of 1974 (ERISA or Act), 29 U.S.C. § 1132(a). That decision is consistent with our governing case law on ERISA’s preemptive scope. I therefore join the Court’s opinion. But, with greater enthusiasm, as indicated by my dissenting opinion in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), I also join “the rising judicial chorus urging that Congress and [this] Court revisit what is an unjust and increasingly tangled ERISA regime.” DiFelice v. AETNA U.S. Healthcare, 346 F.3d 442, 453 (CA3 2003) (Becker, J., concurring).

She goes on to note that the Court “has coupled an encompassing interpretation of ERISA’s preemptive force with a cramped construction of the “equitable relief” allowable under §502(a)(3)” so that “a ‘regulatory vacuum’ exists”, emphasizing that “virtually all state law remedies are preempted but very few federal substitutes are provided.”

Her final words in the opinion were as follows:

“Congress … intended ERISA to replicate the core principles of trust remedy law, including the make-whole standard of relief.” Langbein 1319 [pdf]. I anticipate that Congress, or this Court, will one day so confirm.

Yesterday’s U.S. Supreme Court ruling in Aetna Health Inc. v. Davila is dominating the news today. (Take a look at the Benefits Buzz at Benefitslink.com today and you’ll see that 12 out of the 18 articles posted pertain to the case.) So I would be remiss, I guess, if I didn’t highlight a few of the articles here. Just a few headlines that caught my eye are as follows:

From Forbes.com, “When Fighting HMOs, Shoot First.”

From USA Today.com, “HMOs win, patients lose, and Congress stays in coma.”

From the AZDailysun.com, “Supreme court: States can’t make up own laws about suing HMOs.” (Apparently, nine other states–Arizona, California, Georgia, Louisiana, Maine, New Jersey, Oklahoma, Washington and West Virginia–have laws similar to the Texas Health Care Liability Act which was at issue in the case.)

Also from USA Today.com, “Democrats renew push for patient bill of rights.”

The Kaiser Network.org reports on the case here, showcasing reactions to the case:

According to USA Today, the Supreme Court decision likely will “put more pressure on Congress to broaden ERISA to allow greater remedies for injured patients” (Biskupic, USA Today, 6/22). The decision also “may well reignite the political battle over the long-stalled patients’ bill of rights in Congress,” the Los Angeles Times reports (Los Angeles Times, 6/22). Congressional efforts to pass patients’ rights legislation “fizzled” in 2001, in part because some states had passed their own laws and because “health plans were already offering broader coverage and the ability to appeal decisions,” according to CQ Today (Schuler, CQ Today, 6/21).

SCOTUSblog has a listing of articles here as well.

The U.S. Supreme Court has issued an opinion in the important case of Aetna Health Inc. v. Davila, consolidated with Cigna Healthcare of Texas v. Calad. The court unanimously reversed and remanded the case in an opinion by Justice Thomas. Justice Ginsburg filed a concurring opinion that Justice Breyer joined. The Court held that respondents’ state causes of action fell within ERISA §502(a)(1)(B), and were therefore completely pre-empted by ERISA §502 and removable to federal court.

The New York Times is reporting–“Supreme Court Sides with HMO’s on Patient Suits“:

The Supreme Court said Monday that patients who claim their HMOs wouldn’t pay for needed medical care cannot sue for big malpractice damages, an issue at the heart of the long debate over efficiency versus service in managed health care. The court was unanimous in saying that two HMO patients in Texas cannot pursue big malpractice or negligence cases against their insurers, as they claimed a Texas patient protection law allowed them to do.

UPDATE: Lyle Denniston (via SCOTUSblog) has written about the case here.
You can also listen to his Audioblog post here.

More on the case later . . .

From the Federal News Radio.com, “Early Retirement, Buyouts, and Pickles“:

At one point during my newspaper career I had a job which required me to read the Federal Register every day. And to come up with a story. It taxes the imagination and, I am sure, shortens one’s life. I haven’t felt all that great lately. Anyhow…

From Forbes.com, “The Coming Retirement Crisis“:

Among older households–those headed by people 47 to 64–fewer than half have defined pensions, down from two-thirds 20 years ago, according to research by New York University economist Edward Wolff. The advent of self-managed pension plans such as 401(k)s will pick up some of the slack. But Wolff says that more than 40% of households headed by someone between the ages of 47 and 64 will not be able to replace even half of their retirement income once they stop working and that nearly 20% will have incomes below the poverty level.

Some great local news here on the Rousey IRA/bankruptcy case which will be heard by the U.S. Supreme Court.

An interesting article here from Law.com: “Top Law Professors’ Star Power: They’re a hot commodity, and schools are scrambling to keep them.”

Jenner & Block has announced a new online resource center devoted to ERISA fiduciary issues pertaining to company stock. A highlight of the resource center for me is this list of ERISA Fiduciary and Company Stock Cases (with links to the actual cases). Also, for those wanting to know what the “Fiduciary Fishbowl” is, check this out.

While we are on the subject of ERISA fiduciaries, Pepper Hamilton LLP has posted an article entitled: “ERISA Fiduciary Responsibility: CEOs and Directors In the Bull’s Eye.”