Benesch Benefits Blog 2017-01-01T14:04:19+00:00

Topical and timely news and information on Employee Benefits & Compensation issues

Ninth Circuit Clarifies State Laws Regulating Insurance Do Not Void Discretionary Clauses In Self-Funded ERISA Plans

November 7th, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Nancy R. Chawla

The Ninth Circuit recently held discretionary clauses in a self-funded plan were valid and that California Insurance Code § 10110.6, banning discretionary clause relating to insurance, was preempted by ERISA when applied to a self-funded plan. Williby v. Aetna Life Ins. Co., 867 F.3d 1129 (9th Cir. 2017).

The employee benefit at issues was Boeing’s self-funded short-term disability plan (STD Plan), because it contained a discretionary clause. The Court held that the district court erred by applying the de novo standard of review, rather than the abuse of discretion standard when it reviewed Aetna’s denial of benefits decision.

You may recall that this past May, the Ninth Circuit held that discretionary clauses in fully insured ERISA plans were voided by California Insurance Code § 10110.6. Orzechowski v. Boeing Co. Non-Union Long-Term Disability Plan 856 F.3d 686 (9th Cir. May 2017). See our Blog “Benefit Plan Discretionary Clauses Dealt A Blow In California” for discussion of the Orzechowski decision. California Insurance Code § 10110.6 provides that:

(a) If a policy, contract, certificate, or agreement offered, issued, delivered, or renewed … that provides or funds life insurance or disability insurance coverage for […]

Oregon Retirement Program Faces Court Challenge

October 26th, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Nancy R. Chawla

The ERISA Industry Committee (ERIC) has filed a lawsuit challenging the enforceability of the OregonSaves Retirement Program (OregonSaves). The ERISA Industry Committee v. Read, No. 3:17-cv-1605 (D. Or. Oct. 12, 2017).

Background: OregonSaves, a state-run retirement program, was established to help private-sector employees save more money. It mandates employers who do not sponsor a retirement program to participate in the program. Employers who sponsor a retirement program must file a “certificate of exemption” with the state in order to opt-out of the program.

OregonSaves went into effect on July 1, 2017. By November 15, 2017, employers with at least 100 employees, who do not sponsor a retirement program must begin participating in OregonSaves to remain in compliance with the Oregon law and regulations. See our previous OregonSaves blog post for additional information here.

The Lawsuit: On October 12, 2017, ERIC filed a lawsuit against Tobias Read, Oregon State Treasurer and Chair of the OregonSaves Retirement Savings Board. ERIC, a nonprofit trade association, represents large employers with at least 10,000 employees.

According to ERIC, the Employee Retirement Income Security Act of 1974 (ERISA) governs reporting of plan activities, thus, expressly preempting the “Oregon law and regulations […]

DOL Requests Extension of Final Disability Claims Rule To April 1, 2018

October 16th, 2017|0 Comments

By: Joseph P. Yonadi, Jr.

On October 10th the Department of Labor (DOL) proposed to extend by 90 days the applicability date for the Final DOL Claims Procedure Regulations (Rule) from January 1, 2018 to April 1, 2018.

At the beginning of this year, the Final Rule went into effect on January 1, 2017.  However, the applicability was set for January 1, 2018 in order to give enough time to plan sponsors and claims administrators to update their claim procedure processes caused by the Rule.  Please see the Benesch Law Client Bulletin explaining the changes contained within the Rule here.

The key requirements of the Rule include:

  • Benefits denial notices must contain a discussion of why the plan denied a claim, including the basis for disagreeing with the Social Security Administration disability determination, and standards it used in making the decision;
  • Denial notices, not just notice denying benefits on appeal, must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents;
  • Denial notices must include internal rules, guidelines, protocols, standards, or other similar criteria of the plan that were used in denying a claim, or a statement that none were […]

Contraceptive Coverage Mandate Exemptions Expanded Under Interim Final Rules

October 11th, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Nancy R. Chawla

Last week the Department of Treasury, U.S. Department of Labor, Department of Health and Human Services (Departments) published rules exempting employers from the contraceptive coverage mandate created under the Affordable Care Act.  As a result, hundreds of thousands of women stand to lose access to contraceptive services.

Background: One feature of the 2010 Affordable Care Act was the contraceptive coverage mandate. The mandate paved the way for women to receive access to birth control benefits at no cost through their employers’ health plans. Several employers, including Hobby Lobby, opposed the mandate on religious grounds. In 2014, the Supreme Court ruled that a “closely held” company could invoke religious objections to avoid covering contraception. Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751 (2014). Despite the Hobby Lobby decision, the mandate has made contraceptive services widely accessible to women who otherwise could not afford them.

Exemptions: The Departments created two exemptions to the mandate. One exemption would allow employers to object contraceptive coverage “based on [their] sincerely held religious beliefs.” Another exemption would allow employers to object contraceptive coverage based on their sincerely held “moral convictions.”

All employers, including family-owned companies and publicly traded companies, will […]

New OregonSaves Retirement Program Impacts Employers With Oregon Employees

August 18th, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Nancy R. Chawla

OregonSaves Retirement Program

On July 1, 2017, OregonSaves Retirement Program (“OregonSaves”) went into effect. OregonsSaves is sponsored by the State of Oregon, and is a state-run automatic Roth Individual Retirement Account (“IRA”) for private-sector employees.

OregonSaves will operate such that employers who do not sponsor a qualified retirement plan will be required to automatically enroll employees into the OregonSaves program, and employees will be required to contribute 5% of their compensation to a Roth IRA account. However, employees will be able to opt-out, or choose a different savings rate. After the employer completes the initial employee registration to set up its employees’ Roth IRA accounts, its ongoing obligations are limited to providing OregonSaves update information to its employees, and to make ongoing payroll deductions. Employers are not required to make contributions under OregonSaves.

All employers in the State of Oregon will have to take an action, whether to enroll employees or file a Certificate of Exemption.[1] The following schedule has been established for employers to register with OregonSaves.



Employers that are not exempted from the OregonSaves program will have to take the following steps:

1.              Register for […]

Benefit Plan Discretionary Clauses Dealt A Blow In California

July 21st, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Nancy R. Chawla

Last month, the Ninth Circuit dealt a blow to discretionary clauses contained within ERISA plans when it held that a California statutory provision that banned discretionary clauses was not preempted by ERISA. Orzechowski v. Boeing Co. Non-Union Long-Term Disability Plan (9th Cir. May 11, 2017).

Almost three decades ago, the U.S. Supreme Court created the rule that a de novo standard of review should apply to a denial of benefits claim unless the ERISA plan provides discretionary authority to the plan administrator. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989). If discretionary authority is provided in a plan document, summary plan description, or insurance contract, courts can review the claims denial under an arbitrary and capricious or abuse of discretion standard of review. Both standard of reviews are more favorable than a de novo standard of review.

Boeing’s Plan and Aetna’s Policy

The facts in Orzechowski were that Boeing sponsored a long term disability plan for its employees (the “Plan”). The Aetna long term disability policy granted discretionary authority to Aetna to “review all denied claims, determine whether and to what extent employees and beneficiaries are entitled to benefits, and construe any […]

Olay! Olay! Olay! Olay!…No Fiduciary Rule DELAAAAY! No Fiduciary Rule DELAAAAY!

June 1st, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Shaylor R. Steele

The delays are over, the Fiduciary Rule’s applicability date will not be delayed past June 9, 2017. Accordingly, plan sponsors, and the financial services industry, should be prepared to comply with the rule beginning on June 9, 2017.

However, Secretary Acosta also indicated that the DOL will continue to seek industry and public input on how to revise the bill and eliminate its negative effects on the industry. As of now, it is unclear as to what the Fiduciary Rule will entail with its full implementation date of January 1, 2018; however, based on prior public comments from Secretary Acosta, it may still be likely that substantial revisions are on their way.

On May 22, 2017, the DOL released two pieces of guidance: 1) a Temporary Enforcement Policy, and 2) a Conflict of Interest FAQs. This new guidance comes in the form of transitional guidance and is primarily aimed at the financial services industry relating to its compliance with the rule from June 9, 2017 through January 1, 2018. Noteworthy, is the DOL made it clear that they will not pursue claims against fiduciaries who are acting […]

On Second Thought, DOL Proposes 60-Day Delay to Fiduciary Rule Applicability Date

March 3rd, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Nancy R. Chawla

On March 1, 2017, the Department of Labor’s (DOL) issued a proposed rule to extend the Fiduciary Rule applicability date by 60 days. The current applicability dates for the Fiduciary Duty Rule and prohibited transaction exemptions are set for April 10, 2017. The extension would move the applicability dates to June 9, 2017.

As mentioned in our previous blog post, “To Delay or Not to Delay (the Fiduciary Duty Rule), That is the Question,” the President has directed the DOL to review the new Fiduciary Duty Rule and to consider the issues raised in the President’s February 3, 2017 Memorandum (Memorandum).

The path forward appears to be that under the new proposed rule, there is a 15-day comment period from the date of the proposed rule’s publication in the Federal Register (March 2, 2017), which will end on March 17th. Further, the DOL announced a 45-day comment period attempting to address the concerns outlined in the Memorandum asking whether the Fiduciary Duty Rule, as currently drafted, adversely affects retirement investors.

In order to make sense of any of this, one must essentially make a decision-tree; however, we think there are four potential results that will […]

To Delay or Not to Delay (the Fiduciary Duty Rule), That is the Question

February 28th, 2017|0 Comments

By: Joseph P. Yonadi, Jr. and Shaylor R. Steele

This morning, the Office of Management and Budget (OMB) concluded its review of a proposed regulation entitled “Delay of Applicability Date” that would effectively delay the implementation of the Fiduciary Duty Rule (Rule). However, an odd turn of events took place when the OMB changed the designation of the delay to “economically significant.” This higher designation could potentially mean a longer comment period. The Department of Labor (DOL) is expected to delay the Rule for 180 days. Please stay tuned…

The President’s Memorandum
On February 3, 2017, President Trump issued a Memorandum, directing the Department of Labor to review the new Fiduciary Duty Rule. Most retirement industry spectators, expected the Memorandum to delay the Rule’s April 10 effective date; however, the Memorandum does nothing to officially delay the Rule’s April 10th compliance deadline, it merely directs the DOL to study the Rule and its related exemptions, and, if warranted, to rescind or revise them.

Under the Memorandum, the DOL is directed to consider three economic and legal points: (1) whether the Rule is harmful to investors due to a reduction of Americans’ access to certain retirement products; (2) whether the Rule will adversely affect investors […]

QSEHRA Notice Requirement Deadline Suspended

February 28th, 2017|0 Comments

By: Joseph P. Yonadi, Jr.

In an effort to provide small employers with additional time to furnish the required QSEHRA initial written notice, Treasury and IRS have suspended the deadline until further guidance has been issued that will include a revised notice deadline. For 2017, the first required written notice would have been due on March 13.

Our January 23 blog post apprised you of the 21st Century Cures Act, enacted this past December, that created a Health Reimbursement Arrangement (HRA) for small employers that do not offer a group health plan. The small employer HRA has been given the acronym “QSEHRA.”

We advised that employers with fewer than 50 employees may offer these arrangements if they provide an initial written notice to eligible employees of at least 90 days before the beginning of a year for which the QSEHRA is provided. The written notice must include:

  • a statement of the amount of the eligible employee’s permitted benefit under the
  • a statement that the eligible employee must provide the permitted benefit amount to any health insurance exchange to which the employee applies for advance payment of the premium tax credit;
  • and a statement that an eligible employee may be liable for an individual […]