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Washington D.C. Benefits Law Blog

Employees can challenge deficient COBRA notices

Employees in the District of Columbia and around the country who receive benefits through their employer have a right to accurate and timely notifications about important issues affecting their health care and retirement plans. Under the Employee Retirement Income Security Act of 1974, companies must provide notices of key changes and provisions linked to their benefits. The law is designed to protect employees from damaging and wasteful choices that could undermine their much-needed benefits. One area that is included in ERISA is COBRA coverage, replacement health care coverage offered after a person loses access to workplace-provided health care for certain reasons.

COBRA notices are required by law to contain specific information, including contact information for the plan administrator and an address to send payments. They should also be provided in a timely manner. The U.S. Department of Labor provides model notices for employers to use to structure their COBRA notifications. However, some employees have received COBRA notices lacking required details. Under the law, employees who fail to receive correct and timely notices about their policies can pursue up to $110 a day in compensation.

Plan ambiguity costs employer $4 million

The pension plans and benefits packages of private sector employees in the District of Columbia and around the country are protected by the Employee Retirement Income Security Act. ERISA claims are often filed over alleged breaches of fiduciary duties connected to complex stock transactions, but they may also arise when plan documents contain language that could be subject to more than one interpretation. Such a dispute was recently argued in a federal court in Connecticut over how the word 'maximum" in a life insurance policy should be interpreted.

The claim was filed by an employee's widow who was seeking an additional $4 million in life insurance benefits. The policy documents stated that beneficiaries were entitled to a sum equal to five times the salary of the deceased worker with a minimum and maximum payout of $100,000 and $1 million respectively. The employer felt that the word 'maximum" applied to the payout while the widow believed the language placed a cap on the deceased worker's salary. The widow received $1 million in benefits according to the employer's interpretation.

Industry groups argue ERISA claim should be denied

Several industry groups in Washington, D.C., are urging the Supreme Court to rule in a case addressing required disclosures for retirement plans covered by ERISA, the Employee Retirement Income Security Act. Several organizations, including the National Association of Manufacturers, the U.S. Chamber of Commerce, the American Benefits Council and the American Retirement Association, submitted a joint friend-of-the-court brief calling on the nation's highest court to overturn a decision by the Ninth U.S. Circuit Court of Appeals. In that decision, the court allowed a lawsuit over an alleged breach of fiduciary duties by a plan manager to move forward.

A member of a retirement plan filed suit against Intel's retirement plan administrators over its practice of investing participants' funds in alternative investments that significantly underperformed in comparison to competitors. According to the lawsuit, over 66% of participants were having their funds invested in these custom funds rather than in standard index funds performing equal to or better than the market. The company attempted to have the suit dismissed, claiming that the lawsuit had come too late due to a three-year statute of limitations. The district court agreed that the plan disclosures sent to participants were sufficient to provide actual knowledge to participants.

What to consider before signing an employment contract

Employers in the Washington, D.C., area operate in one of the nation's most competitive job markets. Attracting qualified candidates will usually require offering a comprehensive benefits package as well as an attractive salary. Many of the benefits offered by employers must comply with standards outlined in the Employee Retirement Income Security Act, but companies also consider industry standards and their current and future financial obligations when deciding what to offer their employees. This means that employment contracts are often complex documents that can be difficult to understand.

Employee benefit plans sponsored by employers should, ideally, reward and motivate employees while complying with ERISA.  As an employee you will be entitled to receive certain plan documents upon becoming eligible to participate in the sponsored plans. When negotiating your employment contract, make sure you have your employer add those eligibility dates in your agreement so that you know when to expect your plan documents.  Also ask that you employment contract detail who is the appropriate contact regarding your employee benefits and reflect any intranet sites where documents and forms are located.  Employers sponsoring ERISA benefit plans have a responsibility to tell you the truth about your benefits, so make sure you document your requests and the responses. The employer typically is not the fiduciary, so you may be directed to the appropriate fiduciary respopnsible for the benefit plans. The fiduciary also must be truthful and provide you a complete response to your questions. 

Your employment contract should be drafted with great care to ensure that it reflects all that you need to know about your employee benefits.  Both executives and non-executives should take care to understand the types of benefits offered and when you will become eligible for them. If you are choosing between several job offers or deciding whether or not to sign a new employment contract, legal insight from an attorney experienced in this area could be very helpful.

The protections offered by ERISA

Employees in the Washington, D.C., area and throughout the country may be covered by the federal Employee Retirement Income Security Act of 1974 (ERISA). It applies to most retirement and health plans, and it sets rules as to the information employees who are covered by an ERISA plan are entitled to know. It's worth noting that this legislation does not apply to most plans created outside of the United States. ERISA also doesn't apply to plans that were created or overseen by employees, government agencies or churches.

The legislation has been altered several times since it was first created. Important changes include the Health Insurance Portability and Accountability Act (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA). HIPPA laws are designed to prevent employees from being discriminated against due to their medical care. The COBRA amendment allows employees who have been terminated retain an employer plan for a predetermined amount of time.

Denials of benefits claims for public employees

If you're a public sector or federal employee in the Washington, DC, area, you likely enjoy greater benefits than employees in the private sector. Your benefits package may include generous retirement, disability and medical benefits.

Along with the differences between the benefits packages, the processes for filing benefits claims are also different for public sector and federal employees. When you suffer an injury, become disabled or decide to retire, it can be devastating if your claim for benefits is denied.

Outdated mortality table questioned in ERISA lawsuit

A major purpose of ERISA is to help employees in Washington, D.C., and around the country secure appropriate retirement and health benefits. However, benefit payments may not be dished out correctly if old data is used to determine annuity payment amounts. This, in a nutshell, is what's at the heart of a lawsuit involving a large military shipbuilding company's non-single-life-annuity plans.

In a complaint filed in the U.S. District Court for the Eastern District of Virginia, the company is accused of using outdated mortality data that was first published in 1971. This data assumes 90 percent of the company's employees are male and 90 of the contingent beneficiaries are female. A 6% interest rate is also used. If company retirement plan participants opt for a single life annuity (SLA), they'll receive benefits at a flat monthly rate for each year of service from their retirement date until they pass.

Settlement in retirement account lawsuit against MFS

Some employees in Washington, D.C. may have had the experience of having their retirement funds mismanaged by the investment manager in charge of them. The company Massachusetts Financial Services Co. agreed to a settlement of $6.875 million after a lawsuit was filed in July 2017 by employees who alleged that the company violated the Employee Retirement Income Security Act of 1974. The settlement document was filed on June 14.

Employees said the company had used in-house funds that were expensive and underperforming for their 401(k)s so that the company could make a profit. As part of the settlement agreement, MFS denied wrongdoing, fault, liability or damages. A spokesman said the company agreed to settle the case to avoid further litigation. A court must approve the settlement amount. The company must also change its retirement plans in several ways. It must stop using an in-house option as the default fund. It also has to hire a third party who will evaluate the plans annually.

How to appeal an ERISA benefit claim decision

To protect the pensions of employees in Washington D.C. and all across the United States, The Employee Retirement Income Security Act (ERISA) was signed into law in 1974. Over the years, ERISA has been modified to cover many other types of workplace benefits, including medical insurance, dental insurance, vision plans, disability insurance, and severance agreements. These protections also apply to employees at non-profit organizations and small businesses. Unfortunately, it can be complicated for employees to exercise their rights under ERISA.

When a benefit claim is denied under ERISA regulation, a complex process where the insurance company has a lot of power takes place. This involves an administrative appeal where the insurance company decides whether or not its own decision was correct. This may seem unfair, but there are ways an employee can improve their chances of success. In addition, if an appeal is not filed in time the employee can permanently lose their ability to get the compensation they deserve.

Common ERISA violations and criminal provisions

The purpose of ERISA is to protect employee benefit plan participants and designated beneficiaries in Washington, D.C., and other parts of the country. Even so, there are times when violations occur, some of which can have a serious impact on an employee's company-related benefits. Here's a closer look at common violations and related ERISA provisions.

The Employee Benefits Security Administration conducts regular investigations if there are suspected ERISA violations. Pension and welfare plans could be affected if, for example, a plan is not being operated specifically for the benefit of participants. Action may also be taken if a plan administrator, plan sponsor, or other party uses plan assets for their benefit. Violations could also involve not following the plan's terms, taking adverse actions against an individual simply for exercising their rights under the plan, failing to properly value the assets related to a plan at their current fair market value, and not properly selecting and monitoring service providers.

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