April 1, 2015

Employee Benefits-EBSA Discusses Intention To Finalize Changes Relating To SBCs

In FAQs about Affordable Care Act Implementation (Part XXIV), the Employee Benefits Security Administration (the "EBSA") discusses the intention of the Departments (namely, the Department of Labor, the Department of Health and Human Services, and the Treasury), who are responsible for the rules governing the summary of benefits and coverage (the "SBC"), to finalize certain changes relating to the SBCs. Here is what the EBSA said:

SBC Guidance In General. Public Health Service ("PHS") Act section 2715, as added by the Affordable Care Act and incorporated by reference into ERISA and the Internal Revenue Code, directs the Departments to develop standards for use by a group health plan in compiling and providing an SBC that "accurately describes the benefits and coverage under the applicable plan or coverage." On February 14, 2012, the Departments published joint final regulations to implement the disclosure requirements under PHS Act section 2715 and an accompanying document announcing the availability of templates, instructions, and related materials. After the 2012 final regulations were published, the Departments released six sets of FAQs regarding implementation of the SBC requirements. After consideration of the comments and feedback from interested stakeholders, on December 30, 2014, the Departments published a notice of proposed rulemaking, as well as a new set of proposed SBC templates, instructions, an updated uniform glossary, and other materials.

Upcoming Changes. The Departments intend to finalize changes to the regulations in the near future, which are intended to apply in connection with coverage that would renew or begin on the first day of the first plan year that begins on or after January 1, 2016 (including open season periods that occur in the Fall of 2015 for coverage beginning on or after January 1, 2016).

The Departments also intend to utilize consumer testing and offer an opportunity for the public, including the National Association of Insurance Commissioners, to provide further input before finalizing revisions to the SBC template and associated documents. The Departments anticipate the new template and associated documents will be finalized by January 2016 and will apply to coverage that would renew or begin on the first day of the first plan year that begins on or after January 1, 2017 (including open season periods that occur in the Fall of 2016 for coverage beginning on or after January 1, 2017).

The Departments are fully committed to updating the template and associated documents (including the uniform glossary) to better meet consumers' needs as quickly as possible.

March 30, 2015

ERISA- Fifth Circuit Holds That An Out-Of-Network Hospital Has Standing To Sue A Health Plan Under ERISA For Unpaid Benefits, When Plan Participants Assigned To The Hospital Their Right To Benefits From The Plan

In North Cypress Medical Center Operating Company, Limited v. Cigna Healthcare, No. 12-20695 (5th Cir. 2015), the Fifth Circuit Court of Appeals (the "Court") ruled that an out-of-network hospital has standing-as a matter of both the constitutional minimum standing requirement and statutory standing needed under ERISA-to sue a health plan for payment of benefits, when plan participants had expressly assigned to the hospital their right to benefits from the plan.

In so ruling, the Court took into account the fact that hospital patients covered by a health plan generally assign their claims to the hospital in the admissions process well before their presentment to the plan's insurer or administrator. The Court then looks to the rights of the patient at the time of assignment. The fact that the patient assigned her rights elsewhere does not cause them to disappear. Further, as a fact to be taken into account, a patient suffers a concrete injury if money that she is allegedly owed contractually is not paid, regardless of whether she has directed the money be paid to a third party for her convenience. The patients contracted for coverage at out-of-network providers under their health plans. The patients allegedly incurred charges for medical care, and directed that the payments be made to the provider, but, here, the contracted-for payments have not been made. The patients have thus allegedly been deprived of what they contracted for, a concrete injury.

March 26, 2015

Employee Benefits-IRS Reminds Us That Expanded Actuarial Certifications For Multiemployer Plans Are Due March 31 (For Calendar Year Plans)

In Employee Plans News, Issue 2015-3, March 25, 2015, the Internal Revenue Service ("IRS") reminds us that expanded annual actuarial certifications for multiemployer plans are due March 31 for calendar year plans. Here is what the IRS says:

The Multiemployer Pension Reform Act of 2014 (MPRA), enacted on December 16, 2014, revised the annual funding certification requirements for multiemployer plans by:
• adding a new zone status, and
• providing special rules for entering into and emerging from certain zones.

The revisions generally apply to certifications for 2015 and subsequent plan years. For calendar year plans, the 2015 certification is due by March 31, 2015. MPRA also amended certain provisions of the Pension Protection Act of 2006 (PPA).

Pension Protection Act changes

MPRA made the following changes for zone certifications:
• Made permanent the annual requirement to certify a plan's funding zone. Before MPRA was passed, the annual certification requirement was scheduled to "sunset" on or after December 31, 2014.
• Election of Critical status: Plans projected to be in Critical status in any of the succeeding five plan years may elect to be in Critical status in the current plan year. Plans may bypass Endangered status by making this election.
• Changes made to emergence from Critical status: This was amended to include a condition for projected insolvency and special rules for plans with automatic amortization extensions.

Zone status changes

MPRA added a new zone status available for a plan actuary's annual certification. MPRA also added special rules allowing a plan to be treated as being in a particular zone when, before enactment, the plan would have been in a different zone. The new zone and special rules are indicated in bold below.
• Neither Endangered nor Critical (new special rule): A plan is treated as Neither Endangered nor Critical if it's projected to be in that status as of the end of the 10th plan year following the current plan year. The plan must not have been in either Critical status or Endangered status in the immediately preceding plan year.
• Endangered.
• Seriously Endangered.
• Critical (new special rule): A plan can elect to be treated as Critical if the plan is projected to be in Critical status in any of the succeeding five plan years, but not in Critical status in the current plan year.
Critical and Declining: This is the new zone status that applies if the plan is in Critical status for the current plan year and is projected to become insolvent in the current year or any of the succeeding 14 plan years. The period in which the plan is projected to become insolvent is extended from 14 plan years to 19 plan years if the ratio of inactive participants to active participants exceeds 2:1, or if the funded percentage is less than 80%.

Email and e-fax available for certifications

Actuaries can submit the Annual Actuarial Certification by email, e-fax or regular mail. Certifications must be filed by 90 days after the beginning of the plan year (March 31, 2015, for calendar year plans). The Employee Plans Compliance Unit (EPCU) doesn't provide return-receipt acknowledgements.

File a certification using only one of the following methods:
• Email: EPCU@irs.gov (Note: IRS cannot guarantee internet security for incoming email submissions)
• E-fax: 855-215-7122
• Mail: Internal Revenue Service, Employee Plans Compliance Unit, Group 7602 (TEGE:EP:EPCU), 230 S. Dearborn Street, Room 1700 - 17th Floor Chicago, IL 60604

EPCU offers more information on submission requirements and the actions taken if certifications are not received.

March 24, 2015

ERISA-Third Circuit Rules That Company's Erroneous Interpretation Of A Plan, Which Results In A Denial Of Benefits, Violated ERISA's Anti-Cutback Rule

In Cottillion v. United Refining Company, Nos. 13-4633 & 13-4743 (3rd Cir. 2015), the Third Circuit Court of Appeals (the "Court") was called on the apply ERISA's anti-cutback rule, under which an amendment may not reduce a plan benefit.

In this case, John Cottillion worked at United Refining Company (the "Company") for 29 years. He was age 54 when he quit, and his benefits under the Company's retirement plan (the "Plan") had vested. When Cotillion quit, the Company wrote him a letter, informing him that he may elect to have his monthly retirement benefit from the Plan begin at any time after the month in which Cottillion would turn 60, and that his monthly retirement benefit will be $573.70 at age 60. The letter did not state that the amount of Cottillion's benefit depended on whether he elected to receive it at age 60 or later, or that the benefit would otherwise be reduced if payment started before age 65. Payment of Cottillion's pension benefit commenced before he reached age 65, without a full actuarial reduction. Later, claiming that the failure to apply a full actuarial reduction is an error, the Company attempted to cancel Cottillion's monthly pension payments, then $506.58, and recoup from Cottillion the purportedly excess payments, in the amount of $14,475. This suit commenced, with Cottillion challenging the Company's attempted actions. The district court held that these actions would violate ERISA's anti-cutback rule, 29 U.S.C. 1054(g).

In analyzing the case, the Court said (among other things) that the Company action complained of is based on an erroneous interpretation of the Plan, and that an erroneous interpretation of a plan provision that results in the improper denial of benefits to a plan participant-which occurred in this case- may be construed as an "amendment" for the purposes of the anti-cutback rule. The Court summarized its findings by saying that the Company provided a detailed pension plan that clearly explained how to calculate payments owed to those who, like Cottillion, earned accrued benefits and left employment before he was eligible to receive them. The pension plans' method of calculation did not include an actuarial adjustment for participants who took benefits before turning 65, and ERISA forbids the Company from drafting those reductions into the Plans whether by amendment, interpretation, or otherwise. The Company must pay the employees what it promised, and thus the district court holding is affirmed.

March 23, 2015

Employee Benefits-IRS Reminds Us That Many Retirees Face April 1 Deadline To Take Required Retirement Plan Distributions

An Internal Revenue Service ("IRS") Release, dated March 19, 2015, reminds us that many retirees face an April 1 deadline to take required retirement plan distributions. This reminder applies generally to individuals who turned 70½ during 2014. The Release is here.

March 10, 2015

ERISA-Sixth Circuit Rules That Disgorgement Of Profits Is Not An Available Remedy Against A Fiduciary For Wrongful Denial Of Benefits, When The Plaintiff Had Already Recovered The Full Amount Of The Benefits

In Rochow v. Life Ins. Co. of N. Am., 2015 U.S. App. LEXIS 3532 (6th Cir. 2015), the Sixth Circuit Court of Appeals (the Court) was asked to review the district court's order requiring Life Insurance Company of North America ("LINA") to disgorge profits obtained from its wrongful denial of long-term disability ("LTD") benefits.

In this case, the late Daniel J. Rochow ("Rochow"), an employee of Arthur J. Gallagher & Co. ("Gallagher"), was covered under a LINA policy of insurance providing LTD benefits. Rochow developed a condition known as HSV-Encephalitis, a rare and severely debilitating brain infection, and was forced to resign from Gallagher. Rochow then filed a claim for LTD benefits under the policy with LINA. LINA denied Rochow benefits, stating that Rochow's employment ended before his disability began. Rochow subsequently filed this suit. The case reached the Court, which decided the LINA's denial of the LTD claim was a breach of fiduciary duty under ERISA, since the denial was arbitrary and capricious, was not the result of a deliberate, principled reasoning process, and did not appear to have been made solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries' as required by ERISA. As a result of this finding that a breach of fiduciary duty had occurred, the plaintiff (suing in the late Rochow's place) recovered the LTD benefit denied under ERISA section 502(a)(1)(B). The issue then arose as to whether the plaintiff was also entitled to a disgorgement of profits due to the Court's ruling. A district court had ruled that the plaintiff was so entitled.

In analyzing the case, the Court said that there is essentially one issue before us: is the plaintiff entitled to recover under both ERISA section 502(a)(1)(B) and 502(a)(3) for LINA's breach of fiduciary duty stemming from its arbitrary and capricious denial of LTD benefits, given plaintiff's recovery of the LTD benefits? Section 502(a)(3) makes "appropriate equitable relief" available to redress violations such as a breach of fiduciary duty. The Court concluded that, in this case, the disgorgement relief was not available, since--absent a showing that the the 502(a)(1)(B) remedy is inadequate (and no such showing here)--granting this relief would result in an impermissible duplicative recovery. Accordingly, the Court overturned the district court's ruling, and remanded the case back to the district court to determine if the plaintiff is entitled to prejudgment interest on the benefits recovered.

March 4, 2015

ERISA-Seventh Circuit Holds That Defendant May Not Be Responsible For Withdrawal Liability

In Hotel 71 Mezz Lender LLC v. The National Retirement Fund, No. 14-2034 (7th Cir. 2015), the National Retirement Fund ("NRF") and its trustees sought to hold Hotel 71 Mezz Lender LLC ("Mezz Lender") and Oaktree Capital Management, L.P. ("Oaktree") responsible for multiemployer pension fund withdrawal liability pursuant to section 4201 of ERISA.

In this case, Oaktree, through Mezz Lender, provided financing for the acquisition of a hotel by Chicago H&S Hotel Property LLC ("H&S"). When H&S later defaulted on the loan, it was taken into bankruptcy and the hotel was sold. NRF is a multiemployer pension plan to which H &S had been making employer contributions for the hotel employees under a collective bargaining agreement. NRF contends that the sale of the hotel triggered withdrawal liability to NRF on the part of H&S and any other "trade or business" under common control with it--including both Oaktree and Mezz Lender (together, the "Oaktree parties"). One issue for the Seventh Circuit Court of Appeals (the "Court")-do the Oaktree parties have any responsibility for the withdrawal liability? The Oaktree parties had come under common control with H &S, so the remaining question was whether they conducted a "trade or business".

In analyzing the case, the Court concluded that there was uncertainty and an absence of evidence as to whether the Oaktree parties were engaged in a "trade or business". As such, the Court could not determine whether the Oaktree parties could have responsibility for the withdrawal liability. Consequently, the Court remanded the case back to the district court to make this determination.

March 3, 2015

ERISA-10th Circuit Rules That There Are No Vested Health or Life Insurance Benefits

In Fulghum v. Embarq Corporation, No. 13-3230 (10th Cir. 2015), the Plaintiffs represented a class of retirees formerly employed by Sprint-Nextel Corporation ("Sprint"), Embarq Corporation("Embarq"), or a predecessor and/or subsidiary company of either Embarq or Sprint (collectively "Defendants"). Plaintiffs brought this suit after Defendants altered or eliminated health and life insurance benefits for retirees. Plaintiffs asserted, among others, that Defendants violated ERISA by breaching their contractual obligation to provide vested health and life insurance benefits. The district court granted Defendants summary judgment on this claim, and Plaintiffs appeal.

In analyzing the case, the Tenth Circuit Court of Appeals (the "Court") noted that the plans at issue provide health or life insurance benefits and, thus, are welfare benefit plans under ERISA. Welfare benefit plans are not governed by ERISA's minimum vesting standards and employers are generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans. If, however, an employer has contractually agreed to provide retirees with vested benefits, it may not unilaterally modify or terminate the welfare benefit plan that establishes those benefits. Further, the interpretation of an ERISA plan is governed by federal common law. The Court said that, in deciding whether an ERISA employee welfare benefit plan provides for vested benefits, it will apply general principles of contract construction. In particular, the Court will interpret an ERISA plan like any contract, by examining its language and determining the intent of the parties to the contract. A plaintiff cannot prove his employer promised vested benefits unless he identifies "clear and express language" in the plan making such a promise. Further, a promise to provide vested benefits must be incorporated into the formal written ERISA plan. Summary plan descriptions ("SPDs") are considered part of the ERISA plan documents.

Continuing, the Court said that, having reviewed the SPDs at issue in this matter, the Court concludes Plaintiffs cannot show that any plan contains clear and express language promising vested benefits. The SPDs presented either contained a reservation of rights clause, under which the employer could change or discontinue the benefits at any time, and/or had no clear and express or affirmative promise under which benefits will vest. As a result of the foregoing, the employer may change or stop the health and life insurance benefits in any manner and at

February 11, 2015

ERISA-Fifth Circuit Rules That Plaintiff Is Entitled To Long-Term Disability Benefits

In George v. Reliance Standard Life Insurance Company, No. 14-50368 (5th Cir. 2015), plaintiff Robert George ("George") appeals from the district court's final judgment affirming the decision of the ERISA plan administrator in relevant part. After reviewing the case, the Fifth Circuit Court of Appeals (the "Court") reversed and rendered judgment for George. Further, the Court remanded the case to the district court to determine the amount of benefits to award to George.

In this case, George served as a helicopter pilot in the United States Army. In 1985 George was injured in a helicopter crash, and doctors were forced to amputate one of his legs at the knee. George retired from military service in 1987. After retiring, George began flying helicopters for PHI, Inc. ("PHI"). PHI purchased a long-term disability insurance policy (the "Policy") for George from the defendant, Reliance Standard Life Insurance Co. ("RSL"). George flew for PHI for more than twenty years. But in 2008 he began experiencing severe pain at the site of his amputation, which prevented him from safely wearing his prosthetic limb. As a result, he was no longer able to operate the foot controls of a helicopter, and he was forced to retire from flying. At that time, he was earning $75,495 per year. George filed a claim for long-term disability benefits under the Policy with RSL.

The Policy contains a definition of "Total Disability", which a claimant must satisfy to be entitled to long-term disability benefits. The Policy also contains a relevant limitation provision (the "Exclusion Clause"). The Exclusion Clause limits benefits to 24 months when mental conditions contribute to the disability. RSL determined that George did not meet the definition of Total Disability, and therefore is not entitled to the benefits claimed. RSL further determined that, even if George was Totally Disabled, the Exclusion Clause would apply to limit George's long-term disability benefits to 24 months of payment. George brought this suit, challenging RSL's determinations, under section 502(a)(1)(B) of ERISA.

In reaching its conclusions, the Court noted that, since the Policy gave RSL the appropriate discretion, RSL's determinations are entitled to a deferential review. However, the Court held that RSL abused its discretion when it determined that George was not Totally Disabled. RSL fails to cite any evidence in the record that supports its conclusion that George's ability to perform sedentary work, and to work in the alternative occupations, would allow George to obtain substantially the same earnings that he had as a pilot, This negated RSL's determination that George was not Totally Disabled, as the Policy defines this term. Further, the Court determined that RSL abused its discretion in determining that the Exclusion Clause would apply. There is no evidence in the record that George's mental conditions impaired his ability to hold down a job. As such, the Court reversed the district court's decision and awarded the long-term disability benefits

February 9, 2015

ERISA-Ninth Circuit Remands Case Back To District Court To Consider Whether Plaintiff Is Entitled To The Remedy of Surcharge

In Gabriel v. Alaska Electrical Pension Fund, No. 12-35458 (9th Cir. 2014), plaintiff Gregory R. Gabriel appeals the district court's dismissal of his claims against the defendant Alaska Electrical Pension Fund (the "Fund") and other defendants under ERISA. In this case, the Ninth Circuit Court of Appeals (the "Court") affirmed the district court's determination that Gabriel failed to raise a genuine issue of material fact as to his entitlement to "appropriate equitable relief" under § 502(a)(3) of ERISA, in the form of equitable estoppel or reformation.

However, Court said that, because the district court made its ruling prior to the Supreme Court's decision in CIGNA Corp. v. Amara, the district court did not consider the availability of the monetary remedy against a trustee, sometimes called a surcharge, which the Court held may be "appropriate equitable relief" for purposes of § 502 (a)(3) of ERISA. Accordingly, the Court vacated the district court's ruling that Gabriel is not entitled to any form of "appropriate equitable relief" and remanded the case for the district court to reconsider the availability of surcharge in this case, and, if available, whether Gabriel has adequately alleged a remediable wrong.

February 5, 2015

ERISA-D.C. Court Of Appeals Holds That State Law Cannot Be Applied To Obtain Undistributed Plan Benefits

In Vanderkam v. Vanderkam, No. 13-5163 (D.C. Columbia 2015), the D.C. Circuit Court of Appeals (the "Court") began the case by noting that ERISA entitles certain spouses of pension plan participants to a survivor annuity unless waived pursuant to clearly defined procedures. In this case, the pension plan participant concedes that ERISA vested an annuity in his ex-wife, but nonetheless argues that Texas law, including his Texas divorce decree, requires entry now of a declaratory judgment that, after his death, she place her annuity payments into a constructive trust for his benefit. The district court rejected this claim, holding that ERISA preempts any state law or state-court decree that would otherwise defeat the spouse's vested annuity. The Court affirmed.

In so affirming, the Court said that it emphasized the narrowness of its opinion. The Court said that this case involves an effort by a plan participant to obtain an interest in undistributed plan benefits, and we hold only that absent a qualified domestic relations order and compliance with ERISA's strict waiver provisions for survivor annuities, he may not use state law for that purpose. This opinion has nothing to say about how ERISA might affect an effort by a plan participant to use state law to obtain an interest in benefits after distribution to the beneficiary. That question is not presented in this case, and the Court expresses no opinion on it.

January 29, 2015

ERISA-Supreme Court Rules That There Is No Presumption That Retiree Health Benefits Are Vested

In M & G Polymers USA, LLC v. Tackett, No. 13-1010 (U.S. Supreme Court 2015), the Supreme Court overturned the long standing "Yard-Man" inference of the Sixth Circuit Court of Appeals that retiree health benefits created under a collective bargaining agreement are vested.

In this case, when petitioner M&G Polymers USA, LLC ("M&G") purchased the Point Pleasant Polyester Plant in 2000, it entered a collective bargaining agreement and related Pension, Insurance, and Service Award Agreement (the "P & I Agreement") with the local union. The P & I Agreement provided that certain retirees, along with their surviving spouses and dependents, would "receive a full Company contribution towards the cost of [health care] benefits"; that such benefits would be provided "for the duration of [the] Agreement"; and that the agreement would be subject to renegotiation in three years. Following the expiration of those agreements, M&G announced that it would require retirees to contribute to the cost of their health care benefits. The retirees then sued M&G and related entities, alleging that the P & I Agreement created a vested right to lifetime contribution free health care benefits. The District Court dismissed the complaint for failure to state a claim, but the Sixth Circuit reversed based on the reasoning of its earlier decision in the Yard-Man case. On remand, the District Court ruled in favor of the retirees, and the Sixth Circuit affirmed.

Upon reviewing the case, the Supreme Court held that the Sixth Circuit's decision rested on principles that are incompatible with ordinary principles of contract law. ERISA governs pension and welfare benefits plans, including those established by collective-bargaining agreements. ERISA establishes minimum funding and vesting standards for pension plans, but welfare benefits plans--which provide the types of benefits at issue here--are exempt from those rules. The Supreme Court said that it interprets collective-bargaining agreements, including those establishing ERISA plans, according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy. When a collective-bargaining agreement is unambiguous, its meaning must be ascertained in accordance with its plainly expressed intent.

Continuing, the Supreme Court found a number of deficiencies in Yard-Man and subsequent cases expanding it. These deficiencies include that the Sixth Circuit failed to consider traditional contract principles, including the rule that courts should not construe ambiguous writings to create lifetime promises and the rule that contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.The Supreme Court concluded by that that, although there is no doubt that Yard-Man and subsequent cases affected the outcome here, the Sixth Circuit should be the first to review the agreements under ordinary principles of contract law. As such, the Supreme Court vacated the Sixth Circuit's affirmation and remanded the case.

January 22, 2015

ERISA-Fifth Circuit Rules That Investment Guidelines Are Not "Other Instruments" Which Participants May Request Under ERISA Section 104(b)

The case of Murphy v. Verizon Communications, Inc., No. 13-11117 (5th Cir. 2014), arose out of the spin-off of Verizon Communication, Inc.'s information services unit into a new corporation called Idearc, Inc., which subsequently evolved into SuperMedia, Inc. Several retirees, whose pension benefits were transferred from Verizon pension plans to Idearc pension plans as part of the spin-off, brought a class action suit against defendants-Verizon and the Verizon, Idearc (and later the SuperMedia) pension plans, asserting a variety of claims under ERISA. One such claim stemmed from the defendants' alleged failure to turn over certain documents and disclose certain information to the plaintiffs.

As to these allegations, the Fifth Circuit Court of Appeals (the "Court") noted that the documents sought were investment guidelines for the plans at issue. It said that, under ERISA Section 104(b)(4), plan administrators must, "upon written request of any participant or beneficiary, furnish a copy of the latest updated summary[] plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated." 29 U.S.C. § 1024(b)(4). If a plan administrator fails to comply with this requirement, the district court has discretion to impose a penalty of up to $110 per day. 29 U.S.C. § 1132(c)(1)(B); 29 C.F.R. § 2575.502c-1.

The Court then said that it agrees with the majority of the circuit courts, which have construed Section 104(b)(4)'s catch-all "other instruments" provision narrowly so as to apply only to formal legal documents that govern a plan. Such a construction is consistent with the plain meaning of the term "instrument," i.e., "[a] written legal document that defines rights, duties, entitlements, or liabilities, such as a statute, contract, will, promissory note, or share certificate." (quoting several dictionaries). In this case, the Court concluded that the investment guidelines do not constitute "other instruments" under Section 104(b)(4), as they are not binding on the plans at issue here, and they do not define any rights, duties, entitlements, or liabilities.

January 21, 2015

Employee Benefits-IRS Discusses The Retirement Savings Contributions Credit

In Retirement News for Employers, December 18, 2014 Edition, the Internal Revenue Service (the "IRS") discusses the Retirement Savings Contributions Credit ( sometimes called the Saver's Credit). What the IRS says is here.

January 20, 2015

ERISA-Eighth Circuit Holds That Plaintiff Was Not Entitled To Statutory Damages For Her Employer's Failure To Provide Her With Notification Of COBRA Entitlement

In Cole v. Trinity Health Corporation, No. 14-1408 (8th Cir. 2014), the following obtained. When plaintiff Bonnie Cole stopped working for defendant Trinity Health Corporation ("Trinity Health"), the company failed to timely notify Cole of their right to COBRA continuing health care coverage, as it was required to do. Cole filed this suit, seeking statutory damages, which may be awarded in the court's discretion after a violation of this notification requirement. However, the district court declined to award damages and granted summary judgment to Trinity Health.

The Eighth Circuit Court of Appeals (the "Court") was asked to decide whether the district court's decision was in error. The Court found no abuse of discretion in the district court's denial of statutory damages and therefore it affirmed the grant of summary judgment. The Court noted that, in this case, there is no dispute that Trinity Health violated the COBRA notification requirement. The question before the Court, then, is whether the district court erred in declining to assess statutory damages. Since the decision to assess these damages is left to the discretion of the district court, the Court will review that decision for abuse of discretion.

The district court had reasoned that Cole was not entitled to actual damages because the amount of her unreimbursed medical bills from May 2012 was less than the COBRA premiums she would have had to pay to maintain medical insurance. The district court also reasoned that Cole was not entitled to statutory penalties because "Trinity Health acted in good faith," "[Cole was] not harmed or prejudiced by Trinity Health's tardy notice of ...COBRA rights," and "[Cole was] provided continued medical coverage for approximately eleven months after [her] termination.". The Court found that the district court's denial of statutory damages on the foregoing grounds did not involve any clearly erroneous findings and was not otherwise an abuse of discretion.