Category: Benefits

Today’s Federal Register is here and contains the new proposed regulations implementing the notice requirements for the health care continuation coverage (COBRA) provisions of Part 6 of title I of ERISA. The new reg.’s, as mentioned in yesterday’s post, set minimum standards for the timing and content of the notices required under COBRA and establish standards for administering the notice process. They also contain model forms for use by administrators of single-employer group health plans to satisfy their notice obligations.

This article by Reuters says Bush will sign the Jobs and Growth Tax Relief Reconciliation Act today and this article by MSNBC predicts that investors will benefit, particularly with respect to dividend-paying stocks and technology stocks.

FASB made some decisions about pension accounting yesterday. This excellent article–“FASB Names Key Pension Details Companies Should Disclose“–by Arden Dale for the Dow Jones Newswire at Yahoo! News.com provides a very good summary of the decisions affecting pensions. The article quotes FASB Chairman Robert H. Herz as saying that the Board chose “to propose a number of additional disclosures that could help users of financial statements better assess” the pension plan component and quotes Sherry Thompson, a FASB spokesperson, as saying more will be coming from FASB regarding pension disclosure by the end of the year. Today’s edition of the Wall Street Journal has a very good article reviewing what’s going on in the pension disclosure area. FASB is scheduled to make its decision regarding cash balance plan accounting today.

The SEC has issued proposed rules regarding disclosure required by Sections 404, 406 and 407 of the Sarbanes-Oxley Act of 2002. This article by the American Institute of Certified Public Accountants reports on the rules. In addition, today’s edition of the Wall Street Journal also has an article by Deborah Solomon: “Fraud Detector: SEC Sets a New Rule Aimed at Companies’ Internal Controls.”

Today’s Federal Register is here and contains the new proposed regulations implementing the notice requirements for the health care continuation coverage (COBRA) provisions of Part 6 of title I of ERISA. The new reg.’s, as mentioned in yesterday’s post, set minimum standards for the timing and content of the notices required under COBRA and establish standards for administering the notice process. They also contain model forms for use by administrators of single-employer group health plans to satisfy their notice obligations.

This article by Reuters says Bush will sign the Tax Cut Bill today and this article by MSNBC predicts that investors will benefit, particularly with respect to dividend-paying stocks and technology stocks.

FASB made some decisions about pension accounting yesterday. This excellent article–“FASB Names Key Pension Details Companies Should Disclose“–by Arden Dale for the Dow Jones Newswire at Quicken.com provides a very good summary of the decisions affecting pensions. The article quotes FASB Chairman Robert H. Herz as saying that the Board chose “to propose a number of additional disclosures that could help users of financial statements better assess” the pension plan component and quotes Sherry Thompson, a FASB spokesperson, as saying more will be coming from FASB regarding pension disclosure by the end of the year. Today’s edition of the Wall Street Journal has a very good article reviewing what’s going on in the pension disclosure area. FASB is scheduled to make its decision regarding cash balance plan accounting today.

The SEC has issued proposed rules regarding disclosure required by Sections 404, 406 and 407 of the Sarbanes-Oxley Act of 2002. This article by the American Institute of Certified Public Accountants reports on the rules. In addition, today’s edition of the Wall Street Journal also has an article by Deborah Solomon: “Fraud Detector: SEC Sets a New Rule Aimed at Companies’ Internal Controls.”

We have all seen in the news stories about pension plans gravitating towards “alternative investments.” Benefitslink points us to this article by the Benchmark Companies regarding the challenges ERISA plan fiduciaries may face in monitoring and reviewing the “alternative investments” of pension funds, such as hedge funds and venture capital funds.

The U.S. Supreme Court issued another important opinion today affecting the benefits area: No. 01-1368, Nevada Department of Human Resources v. Hibbs. The Court upheld the constitutionality of the Family Medical Leave Act of 1993 (“FMLA”) by a 6-3 vote and ruled that Congress acted within its power when it applied the FMLA to the states. The law authorized state employees to sue states for damages for failing to give them leave under the FMLA. A state employee, William Hibbs, had sued the agency he worked for because it refused to give him leave to care for his wife who was recovering from an automobile accident. The Court declared in this opinion that Mr. Hibbs did indeed have the right to recover damages in federal court.

The Chief Justice wrote the opinion and was joined by O’Conner, Souter, Ginsburg and Breyer. Souter filed a concurring opinion with Ginsburg and Breyer joining. Stevens filed an opinion concurring in the judgment. Justices Kennedy, Scalia, and Thomas dissented.

James Vicini for Reuters reports on the case via Yahoo! News and David Stout for the New York Times reports as well via Yahoo! News.

Today’s U.S. Supreme Court delivered a unanimous opinion written by Justice Ginsburg on the “treating physician rule” in No. 02-469, Black & Decker Disability Plan v. Nord and settled a division among the Circuits on the propriety of the “treating physician rule.” The case involved an ERISA disability plan which provided benefits for eligible disabled employees of Black and Decker. Employee Nord submitted a claim for disability benefits and at the plan administrator’s review stage, submitted letters and supporting documentation from his physicians who had concluded that he suffered from a degenerative disc disease and chronic pain that rendered him unable to work. Black & Decker then referred Nord to their neurologist who determined that Nord was not “disabled” under the plan and therefore his claim was denied. Seeking to overturn the determination, Nord filed an action under ERISA. The District Court granted summary judgment for the plan, concluding that the company’s denial of Nord’s claim was not an abuse of the plan administrator’s discretion. The Ninth Circuit reversed and itself granted summary judgment for Nord. They based their decision on another Ninth Circuit decision holding that, when making benefit determinations, ERISA plan administrators must follow a “treating physician rule.” This rule required a plan administrator who rejects the opinions of a claimant’s treating physician to come forward with specific reasons for the decision, based on substantial evidence in the record.

The U.S. Supreme Court vacated and remanded the Ninth Circuit decision and held that ERISA does not require plan administrators to accord special deference to the opinions of treating physicians. The Court stated: “Nothing in ERISA or the Secretary of Labor’s ERISA regulations suggests that plan administrators must accord special deference to the opinions of treating physicians, or imposes a heightened burden of explanation on administrators when they reject a treating physician’s opinion.” (The DOL had filed an amicus brief opposing the adoption of such a rule for disability determinations under plans covered by ERISA.) The Court stated further: “Plan administrators may not arbitarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician. But courts have no warrant to require administrators automatically to accord special weight to the opinion of a claimant’s physician; nor may courts impose on administrators a discrete burden of explanation when they credit reliable evidence that conflicts with a treating physician’s evaluation.“

This very insightful article by Elizabeth MacDonald at Forbes.com via Yahoo! News quotes Michael D. Hirsch, senior portfolio manager at Mony Group Advest investment unit, as saying that the “market has not yet priced in the pension hits about to come” and that “financial dislocations” still await us with respect to the whole pension funding problem facing a multitude of companies.

The ERISA Industry Committee has written a letter urging FASB not to address the cash balance plan discount rate at this time. Read more about this here. (See a previous post regarding this issue here.)

Today’s Federal Register is here. The U.S. Department of Labor has announced proposed rules clarifying the requirements for notices under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for employees, employers and plan administrators. The proposal provides guidance and model notices for workers and family members to continue their group health care coverage and is scheduled to be published tomorrow in the Federal Register. A fact sheet on the proposal is available on EBSA’s website here. James Mackintosh discusses the benefits to GM from the proposed Portman-Cardin Bill currently before the House of Representatives in this article for FT.com. Predictions of a “demographic tsunami” are here in an article by Marilyn Geewax of the Palm Beach Post Washington Bureau at PalmBeachPost.com: “Pension system on shaky ground.” The New York Times reports that an estimated 300,000 French workers, teachers and students marched Sunday in protest against their government’s plans to extend the period of service required for a guaranteed pension from 37.5 years to 40 years.

Mark Schwanhausser and Jack Davis offer this report for the Mercury News at SiliconValley.com: “Paychecks plunged for bosses as options stayed under water.” Patrick Danner for the Miami Herald offers this slightly different view: “Dark clouds on corporate profits don’t stop deluge of bonuses for top executives.”

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