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Washington D.C. Benefits Law Blog

Rule change promotes creation of Association Health Plans

The Department of Labor has changed a rule about health benefits that could affect workers in the District of Columbia and across the country, particularly those who work for small businesses. The rule change was prompted by a 2017 executive order by President Trump and is intended to promote the creation of Association Health Plans or AHPs. These plans are designed to provide a form of group health insurance for small employers who come together to form an association. Because they can be considered large group policies rather than small group or individual policies, they are exempt from some of the provisions of the Affordable Care Act.

This means that AHPs may be a more affordable benefits option for some small businesses, self-employed people and related individuals, but members of the plan may lack some of the consumer protections provided for in the ACA. The Department of Labor's new rule eliminated certain restrictions on the formation of AHPs that were in place by promulgating a new understanding of the definition of "employer" under the Employee Retirement Income Security Act. ARPs are considered a form of joint employee welfare benefit plan shared among multiple employers.

What to do when an ERISA claim is denied

If a District of Columbia resident files a claim for disability benefits under an ERISA plan, that claim may be denied. If it is, the exact reasons for the denial will be sent to the applicant. This will be done either electronically or in writing, and electronic notices will be provided in a way that conforms with the law. In addition to the reason for the denial, a notice will include information as to what information may be needed to overturn it.

Applicants generally have the right to appeal a denial, and the notice should tell them how to do so. They should also be told how long they have to appeal if they choose to do so. A request to review the denied claim must be made no more than 180 days after learning of the denied application. The person who reviews the appeal will not be the same person who made the original determination.

About the ERISA preemption

There are many laws that protect workers' rights with regard to pensions and healthcare benefit plans. However, workers in Washington, D.C., should be aware of the Employee Retirement Security Act of 1974 and how the ERISA preemption can affect certain protections provided by local and state laws.

ERISA is a complicated federal law that is intended to prevent mismanagement and fraud in private health and pension plans. However, because the regulations take priority over any similar or conflicting local and state laws, individuals may find that the protections they have against unfair claim denials in the state in which they reside might not be applied.

ERISA: Protecting your benefits under federal law

If you work in Washington, D.C., you may be concerned about how to handle improper actions taken by your employer when they affect your benefits. There is a law, the Employee Retirement Income Security Act, or ERISA, that is designed to protect the interests of workers in their retirement accounts as well as other key benefits provided on the job. While ERISA is best known as protective legislation to prevent unethical behavior with employee pensions, it also applies to medical insurance, health reimbursement accounts, additional health plans, disability insurance and severance agreements.

ERISA guidelines apply to the vast majority of private employers across the country, including nonprofit organizations and small businesses. Even a "mom-and-pop" company is likely subject to ERISA's provisions. However, you may be unclear about how exactly you can make use of the protections under the law and how you can protect your rights as a worker. There are a number of specific provisions under the law that guide how a complaint should be made.

Reasons for an increase in 401k lawsuits

Workers in Washington, D.C., and throughout the country filed 107 401k lawsuits in 2016 and 2017. That was the highest since 2008 and 2009 when 169 such suits were filed. Excessive fees, self-dealing and poor investment choices are the three main reasons why a 401k lawsuit could be filed. In some cases, a lawsuit is the result of relatively vague guidance given to fiduciaries.

Individuals are asked to make investment choices in an effort to avoid large losses. However, when an investment fails to keep pace with others in its class, it could lead to a lawsuit. Self-dealing occurs when a fiduciary chooses a fund that he or she may run or otherwise have a stake in. When a fiduciary chooses an investment that has low returns or high fees, that ultimately goes against the investor's interest, which could be a violation of Employee Retirement Income Security Act law.

New rules for ERISA benefits claim evaluations

New rules are scheduled to take effect for short- and long-term disability claims and how they are investigated by plan fiduciaries. These changes will affect workers who have short- or long-term disability benefits through their jobs in Washington, D.C. and in the rest of the U.S.

Short- and long-term disability benefits fall under the mandates of the Employee Retirement Income Security Act, which is a federal law that governs employee benefits. The regulations are meant to add new protections to people who file claims for benefits when they become disabled and are unable to return to their jobs either temporarily or permanently. The regulations make a number of changes that should help to make the claims process more transparent and fair.

Benefit audits decline but recovery proceeds up in 2017

News from Washington, D.C. indicates that although the Department of Labor is conducting fewer audits of employee retirement plans, it is recovering greater sums of money from missing employee contributions. The Labor Department's Employee Benefit Security Administration is responsible for enforcing policies to protect employee retirement funds. While American employers do not have to offer retirement programs and benefits to their employees, once those programs exist, they must follow certain guidelines and procedures in government regulations.

The Employee Retirement Income Security Act of 1974, or ERISA, mandates certain standards for retirement funds. When they are not followed, EBSA can step in to recover the missing monies. In fiscal year 2017, EBSA recovered over $1.1 billion in employee contributions that had gone missing from their retirement funds, up from $777.5 million in recoveries for fiscal year 2016. The increased recoveries came in despite the agency closing 295 fewer cases in 2017.

TIAA accused of profiting illegally from retirement plan loans

Workers in Washington, D.C., whose retirement plans are managed by TIAA might have a stake in the lawsuit filed against the company by one investor. The attorneys for the plaintiff are pursuing a class-action suit on the grounds that TIAA allegedly made over $50 million a year by keeping interest from payments made by retirement plan participants who took loans. According to the lawsuit, the company should have credited interest paid by borrowers to their retirement accounts instead of keeping some of the money.

A federal judge has ruled that a portion of the lawsuit may proceed after deciding that some accusations against TIAA appeared credible. The judge applied the legal theory of disgorgement to the case. If found to be valid, the retirement plan service company might have to return money taken while processing loans by plan participants. The profits generated by the practices of TIAA might have violated federal laws that concern retirement plan administration.

Ocwen sued by pension fund for ERISA breaches

Washington, D.C., members of the Employers Midwest Pension Fund and the United Food & Commercial Workers Union might be interested in learning that the trustees have filed a lawsuit against Ocwen. Ocwen, which is a mortgage lender, allegedly forced people into foreclosure in an effort to drive up profits.

According to the lawsuit, the trustees allege that Ocwen acted in violation of its fiduciary duties under ERISA. ERISA governs pensions and requires that fiduciaries act with due diligence and loyalty to investors. Since the pension fund invested in mortgage-backed securities that are held by Ocwen, the plaintiffs allege that Ocwen's actions toward the homeowners also harmed the pension fund.

University faces ERISA-related lawsuit

Some employees in the District of Columbia may have had their retirement funds mismanaged. A lawsuit filed against Georgetown University and several officials alleges that the university's defined contribution retirement plans were not adequately overseen and that this resulted in fees that were excessive and unreasonable. According to the lawsuit, the university in fact had a significant amount of bargaining power and could have used that for the benefit of plan participants and their beneficiaries.

One of those breaches of duty, the complaint says, was using three different service providers instead of selecting one. This significantly drove up fees for several reasons. One was that it resulted in an enormous number of investment choices that officials could not adequately monitor for performance. The lawsuit said that it was unreasonable to expect plan participants to screen these out and that they should have been excluded by the officials responsible for managing the plans. Furthermore, the lawsuit also states that a TIAA loan program was flawed in several ways. It required too much collateral, involved illegally transferring plan assets and was in violation of Department of Labor rules for these types of loan programs.


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