Category: Erisa

I am working on the formatting problems at the bottom . . .

Some very good articles have been posted at EBIA Weekly: this article on the recent Supreme Court case of Nevada Dept. of Human Resource v. Hibbs previously discussed in this blog and this article on another U.S. Supreme Court ERISA case of Black & Decker Disability Plan v. Nord also discussed here. The latter article emphasizes what plan administrators need to be reminded of (if they do not know it already), that is, that even though a plan administrator need not give deference to a treating physician’s opinion, a treating physician’s opinion cannot be ignored and must at least be considered in the decisionmaking process along with the other evidence provided by the claimant.

Some thoughts and notes from materials presented at the recent ALI-ABA seminar, “ERISA Fiduciary Responsibility Issues Update: Qualified Pension and 401(k) Plans and ESOPs in a Post-Enron World,” last week will be published here over the next week or so. . .

Karen L. Handorf, Deputy Associate Solicitor, Plan Benefits Security Division, of the Department of Labor, spoke on the recent case “Black & Decker Disability Plan v. Nord” which was reviewed here in a previous post. The recent U.S. Supreme Court case holds that ERISA does not require a plan administrator to use the “treating physician rule” for purposes of determining eligibility under a disability plan. Ms. Handorf said that the case resolved a split within the circuits on this issue and that the reasoning behind the Supreme Court’s decision were basically two-fold: (1) The court said there was no reason to take the Social Security Administration’s use of the “treating physician rule” and apply it to ERISA due to the differences between Social Security and ERISA; and (2) the 2002 DOL claims regulations had not included the “treating physician rule” and therefore the courts should not promulgate a rule in this area. An interesting issue that was left unresolved, she said, was: what standard of review should there be where a conflict of interest exists for the plan administrator? Ms. Handorf noted that the DOL had filed an amicus brief in the case and that the court had upheld the flexibility given to employers under ERISA in designing these types of plans.

She contrasted, however, the U.S. Supreme Court case of Kentucky Association of Health Plans v. Miller, decided April 2, 2003, in which she said flexibility for the plan sponsor and HMO gave way to the state’s interest in assuring broad based participation in these plans. In that case the court held that a state’s “any willing provider law” was not preempted by ERISA. The court rejected a test utilized in previous cases and adopted a new test for determining whether or not a law was held to “regulate insurance” and “saved” from preemption under the “savings clause” of ERISA. The court stated:

“Today we make a clean break from the McCarran-Ferguson factors and hold that for a state law to be deemed a “law . . . which regulates insurance” under §1144(b)(2)(A), it must satisfy two requirements. First, the state law must be specifically directed toward entities engaged in insurance. . . Second, as explained above, the state law must substantially affect the risk pooling arrangement between the insurer and the insured. Kentucky’s law satisfies each of these requirements.”

The panel of attorneys presenting at the seminar agreed that the case will mean a broadening of the “savings clause” under ERISA and fewer state laws being preempted under ERISA.

Some thoughts on notes from presentations at the ALI-ABA seminar via satellite, “ERISA Fiduciary Responsibility Issues Update: Qualified Pension and 401(k) Plans and ESOPs in a Post-Enron World,” last week and will publish my thoughts and notes on some of the material presented over the next week or so. . .

Karen L. Handorf, Deputy Associate Solicitor, Plan Benefits Security Division, of the Department of Labor, spoke on the recent case “Black & Decker Disability Plan v. Nord” which was reviewed here in a previous post. The recent U.S. Supreme Court case holds that ERISA does not require a plan administrator to use the “treating physician rule” for purposes of determining eligibility under a disability plan. Ms. Handorf said that the case resolved a split within the circuits on this issue and that the reasoning behind the Supreme Court’s decision were basically two-fold: (1) The court said there was no reason to take the Social Security Administration’s use of the “treating physician rule” and apply it to ERISA due to the differences between Social Security and ERISA; and (2) the 2002 DOL claims regulations had not included the “treating physician rule” and therefore the courts should not promulgate a rule in this area. An interesting issue that was left unresolved, she said, was: what standard of review should there be where a conflict of interest exists for the plan administrator? Ms. Handorf noted that the DOL had filed an amicus brief in the case and that the court had upheld the flexibility given to employers under ERISA in designing these types of plans.

She contrasted, however, the U.S. Supreme Court case of Kentucky Association of Health Plans v. Miller, decided April 2, 2003, in which she said flexibility for the plan sponsor and HMO gave way to the state’s interest in assuring broad based participation in these plans. In that case the court held that a state’s “any willing provider law” was not preempted by ERISA. The court rejected a test utilized in previous cases and adopted a new test for determining whether or not a law was held to “regulate insurance” and “saved” from preemption under the “savings clause” of ERISA. The court stated:

“Today we make a clean break from the McCarran-Ferguson factors and hold that for a state law to be deemed a “law . . . which regulates insurance” under §1144(b)(2)(A), it must satisfy two requirements. First, the state law must be specifically directed toward entities engaged in insurance. . . Second, as explained above, the state law must substantially affect the risk pooling arrangement between the insurer and the insured. Kentucky’s law satisfies each of these requirements.”

The panel of attorneys presenting at the seminar agreed that the case will mean a broadening of the “savings clause” under ERISA and fewer state laws being preempted under ERISA.

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.“

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.

Today’s Federal Register is here. The IRS has posted information on their website that you can access here regarding the Health Coverage Tax Credit (“HCTC”). Clint Willis has this report for Reuters via Forbes.com: “Funds: A 401(k) crisis for fund investors” and Scott Burns has this very interesting article “Tools for retirement today are incomparable“at HoustonChronicle.com, giving a quick history lesson regarding the tools which have become available to participants of retirement plans over the years. Bloomberg offers this report on today’s strike by French workers over pensions. Jennifer Hickey with Insight on the News offers this article “Protecting the Pensions of American Workers” and calls the debate on Capitol Hill regarding pension security “controlled chaos.”

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Welcome to ERISAblog an ERISA law commentary and news filter, written and maintained by B. Janell Grenier, Esq., of the Grenier Law Office, a Philadelphia-area law firm. Ms. Grenier has over 20 years of experience counseling clients in all aspects of employee benefits law, including the design, drafting, implementation and administration of qualified and nonqualified retirement plans, flexible compensation programs, welfare benefits plans, and fiduciary law aspects of ERISA. Her clients have included small private start-up companies, family-owned businesses, Fortune 100 companies, as well as tax-exempt and governmental entities. Ms. Grenier is admitted to practice law in the following states: Pennsylvania, Missouri, Oklahoma and Utah.

Ms. Grenier’s practice has involved her in extensive plan compliance work on behalf of clients, including plan compliance audits, submitting plans for correction under the IRS’ Employee Plan Compliance Resolution Program, obtaining prohibited transaction exemptions and advisory opinions from the Department of Labor and private letter rulings from the Internal Revenue Service. Her experience also includes representing Plan fiduciaries in governmental and adversarial proceedings and protection of Plan fiduciaries through ERISA fiduciary compliance programs.

Previous experience includes the following: Special Counsel, Morgan, Lewis & Bockius LLP (Philadelphia, Pennsylvania), Of Counsel, Ray, Quinney & Nebeker (Salt Lake City, Utah), Associate, Stinson, Morrison & Hecker LLP (Kansas City, Missouri), and Partner, Hartzog, Conger & Cason (Oklahoma City, Oklahoma).

The U.S. House of Representatives is scheduled to debate and vote on family time legislation