Month: February 2005

For those of you interested in the litigation surrounding legislation of pharmacy benefit managers, you will want to read this opinion here from a federal district court in Maine issued February 2, 2005, holding that Maine’s Unfair Prescription Drug Practices Act (UPDPA), as amended, 22 M.R.S.A. § 2699 (“UPDPA”) is not preempted by ERISA. The Pharmaceutical Care Management Association (PCMA), the national trade association representing pharmaceutical benefits management companies (PBMs), sued Attorney General Rowe in 2003 alleging that the UPDPA is preempted by ERISA and the Federal Employee Health Benefits Act; that it would effect a regulatory taking of trade secrets, revenues, and contractual rights; that it violates PBMs’ civil rights; and that it is unconstitutional for violations of due process, the Commerce Clause, and freedom of speech. Yesterday, after more than a year of intense litigation between industry lawyers and the Attorney General’s Office, U.S. Magistrate Margaret Kravchuk found in favor of the Attorney General on all claims.

The Attorney General’s press release is here.

PCMA’s press release is here.

Law.com is reporting: “Merrill Lynch Wins Workers’ Suit Over WorldCom 401(k) Choices.” The article reports that “Southern District of New York Judge Denise Cote, who is also presiding over WorldCom’s securities class action cases, held that as a “directed trustee” under ERISA, Merrill Lynch’s fiduciary duties were limited in nature and that its decision not to block investment in WorldCom stock by the company’s 401(k) participants did not amount to a breach of its fiduciary duties.” The article further notes Judge Cote’s statements regarding the “duty of inquiry”:

“When a directed trustee receives a direction to invest plan assets in the securities of a company … [it] has a fiduciary duty of inquiry under ERISA when it knows or should know of reliable public information that calls into serious question the company’s short-term viability,” Judge Cote held.

“Knowledge that a company’s fortunes are declining does not impose a duty of inquiry,” she continued.

More on this when I have had a chance to read through the decision. . .

Jim Calloway, Director of the Oklahoma Bar Association Management Assistance Program, has written a good article here–“Was 2004 The Year of the Blog?” Thanks to Jim for listing me among some of the first “Okie lawyer-bloggers” in his article. Jim has recently joined the blogosphere himself with his own blog entitled “Jim Calloway’s Law Practice Tips” which he says he thought about for two years and “then did it in two days.” I look forward to all of the good information that I know he will sharing there as I have greatly enjoyed reading his articles that are published in the Oklahoma Bar Journal from time to time.

Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen. Max Baucus, ranking member, have re- introduced their pension protection legislation — the National Employee Savings and Trust Equity Guarantee (NESTEG) Act – which received unanimous Finance Committee support last year but never won final approval. The NESTEG bill would expand protections for retirement plan participants and require companies to allow their employees to diversify out of company stock, adopt a replacement for the 30-year Treasury rate used for pension funding purposes, expand the portability of retirement plan assets, and “simplify pension laws and regulation.”

The press release here states that the Committee will consider additional pension funding reforms in light of concerns regarding pension underfunding and the financial health of the PBGC.

A section-by-section summary of the provisions of the bill is attached to the press release which you can access here. You can access more information about the bill (S. 219) here. Among the changes proposed is a permanent replacement of the 30-year Treasury rate with a yield curve based on corporate bond rates. Last year, Congress approved a temporary replacement of the 30-year Treasury rate with a long-term corporate bond rate for pension funding purposes.