Benefits Counsel

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.”

You can access information on the new domain names available for professionals, including attorneys, here. Eligible registrants may register with RegistryPro as one of three major profession-specific domains: .law.pro, .cpa.pro, and .med.pro.

Benefitslink points us to more analysis regarding the new deemed IRA regulations by Sutherland Asbil and Brennan here.

NASA’s Mars Global Surveyor (MGS) spacecraft currently orbiting the Red Planet has provided this picture of our world (via Spaceflight Now). NASA says it is the first successful picture of earth taken from Mars. Suddenly, how insignificant we all seem . . . Also, this article reports that hundreds of Albert Einstein’s scientific papers, personal letters and essays have been published online here. For instance, you can read what Einstein wrote about the “common element in scientific and artistic experience” here.

The Federal Register is here. The Conference Agreement on the Tax Cut Bill (HR 2) can be accessed here. AP writer, Mary Dalrymple, reports via Yahoo! News that Bush will sign the bill next week and gives a good run-down of what’s in the bill. Larry Margasak also reports for Yahoo! News that the special interest provisions were cut from the bill in order to get the bill done and help the economy.

Watson Wyatt discusses a new accounting approach proposed by FASB for determining liabilities in cash balance pension plans which could artificially drive up the liabilities for many of these plans on corporate balance sheets in this article.