Washington D.C. Benefits Law Blog

A recent ruling in the Eighth Circuit might be interesting to employees and employers in the Washington, D.C. area as well as the rest of the country. While the ruling is only binding on courts in the Eighth Circuit, it might indicate how other circuits might likewise rule.

The decision involved a practice called cross-plan offsetting that is used by some ERISA plans to recover overpayments. In the practice, plan administrators reduce future payments to offset overpayments that they have made. The plan administrators may deny or reduce payments to specific providers in the future because of overpayments even if the subsequent claims were made by different plan participants.

The nation's highest court may rule in Washington, D.C., on which party is responsible for proving loss causation when a dispute over the management of defined contribution benefit plans goes to court. One company currently involved in such a case appealed to the Supreme Court to settle the disparate approaches taken among federal appeals courts about who must prove losses when plan members file suit over fiduciary breaches of the Employment Retirement Income Security Act (ERISA), which protects employee benefits from misuse or fraud.

One company involved in an ERISA benefits dispute has requested that the Supreme Court rule on the issue to provide a definitive national framework for assessing loss causation. In six appellate courts, plaintiffs suing the fiduciaries of these plans have the burden of proof to show that losses were caused by fiduciary breaches of duty. On the other hand, four courts have ruled that the defendants must show that losses were not caused by any breaches of fiduciary duty. The petition noted that the high court is well-placed to resolve this fundamental divide that can mean similar cases are treated substantially differently, even under a uniform national law.

Governmental agencies employ many workers in Washington D.C. These organizations generally qualify for the government exemption to operational rules for pension and benefit plans imposed by the Employee Retirement Income Security Act. A brewing class action lawsuit brought by a group of current and former hospital employees has challenged the health care organization's assertion that ERISA rules do not apply to its health plan because it is a governmental entity.

The lawsuit maintains that the hospital has no recognizable basis for declaring itself exempt from ERISA regulations that normally apply to private employers. If the hospital had followed ERISA rules, then it would not have allegedly engaged in self-dealing transactions with affiliates and vendors that unnecessarily increased health care costs for plan participants.

A number of changes have been made to the procedures involved with ERISA benefits claims that may affect workers and employers in the Washington, D.C., metropolitan area. It is important for workers and their employers to be aware of these changes because they could impact the way in which disability claims are handled.

The U.S. Department of Labor issued rules that impact long-term disability plans. The rules also have an impact on other ERISA benefits, including tax-deferred retirement plans, defined benefit pensions and certain deferred compensation plans for executives.