Employee Retirement Income Security Act Research Articles

The US Supreme Court and Future of Financing Dialysis Care.

The US Supreme Court and Future of Financing Dialysis Care.

UBH to Reimburse Beneficiaries, Pay Penalties

Back to table of contents Previous article Next article ProfessionalFull AccessUBH to Reimburse Beneficiaries, Pay PenaltiesMark MoranMark MoranSearch for more papers by this authorPublished Online:15 Oct 2021https://doi.org/10.1176/appi.pn.2021.11.28AbstractA Department of Labor investigation found that United Behavioral Health reduced rates for mental health professionals, overcharged beneficiaries for services, and subjected them to utilization review and denials of care.iStock/Kiyoshi TannoUnited Behavioral Health (UBH)/UnitedHealthcare Insurance Co. will pay $13.6 million to beneficiaries and $2,084,249 in penalties related to investigations and a lawsuit brought against UBH by the U.S. Department of Labor (DOL) and the office of the New York State Attorney General.An investigation by DOL’s Employee Benefits Security Administration found that since 2013, United had reduced reimbursement rates for out-of-network mental health services provided by psychologists, thereby overcharging participants for those services. The managed care company especially flagged mental health patients for utilization review, resulting in many denials of payment for those services.United’s actions violated the Mental Health Parity and Addiction Equity Act of 2008, which prohibits health plans governed by the Employee Retirement Income Security Act (ERISA) from imposing treatment limitations on mental health and substance use disorder benefits that are more restrictive than the treatment limitations they impose on medical and surgical benefits.Investigators also found United failed to disclose sufficient information about these practices to plans and their participants and beneficiaries. In the settlement, United agreed to cease the violations, improve its disclosures to plan participants, and commit to future compliance.“Protecting access to mental health and substance use disorder treatment is a priority for the Department of Labor—and something I believe in strongly as a person in long-term recovery,” said U.S. Secretary of Labor Marty Walsh in a statement. “This settlement provides compensation for many people who were denied full benefits and equitable treatment. We appreciate [New York] Attorney General Letitia James and her office’s partnership in investigating, identifying, and remedying these violations.”In a statement, James said United’s violations were especially egregious in light of the great need for treatment during the opioid epidemic and the COVID-19 pandemic.“In the shadow of the most devastating year for overdose deaths and in the face of growing mental health concerns due to the pandemic, access to this care is more critical than ever before,” she said. “United’s denial of these vital services was both unlawful and dangerous—putting millions in harm’s way during the darkest of times. There must be no barrier for New Yorkers seeking health care of any kind, and I will always fight to protect and expand it. I thank Secretary Walsh for his partnership on this important matter.” ■Information about the DOL lawsuit is posted here. ISSUES NewArchived

Groundbreaking Court Ruling Against Insurer Offers Hope in 2020

Groundbreaking Court Ruling Against Insurer Offers Hope in 2020

Legal setback doesn't deter patient from parity fighting UnitedHealth Group

A federal judge in California this month dismissed a young adult's class‐action complaint against UnitedHealth Group and several of its affiliates and subsidiaries for alleged violations of the Employee Retirement Income Security Act (ERISA), but the young man and his counsel see the latest development as merely a speed bump in their pursuit of claims against the major insurer.

An Actuarial Perspective on Pension Plan Funding

The Pension Benefit Guaranty Corporation (PBGC) was established by the Employee Retirement Income Security Act (ERISA) to provide insurance guarantees for qualified pension plans insufficiently funded to provide accrued vested benefits. The PBGC’s annual reports on the liabilities for plans it has taken over and the agency’s assets show that the Single Employer Program has seen this net position vary from a surplus of almost $10 billion in 2000, to a deficit of over $29 billion in 2012. The PBGC uses a proprietary Pension Insurance Modeling System to model future scenarios for their obligations. This paper offers observations on future pension plan funding and how this could affect the PIMS model, based on the current environment, and how the agency might respond to change.

Enforcement of Parity Law Broadens to Include New Areas of Insurer Violations

Enforcement of Parity Law Broadens to Include New Areas of Insurer Violations

The Other Securities Regulator: A Case Study in Regulatory Damage

Although the Securities and Exchange Commission is the primary securities regulator in the United States, the Department of Labor also engages in “securities regulation.” It does so by virtue of its authority to administer the Employee Retirement Income Security Act (ERISA), the statute that governs the investment of retirement assets. In 2016, the DOL used its securities regulatory authority to adopt a rule that, for the first time, designates securities brokers who provide investment advice to retirement investors as fiduciaries subject to ERISA’s stringent transaction prohibitions. The new rule’s objective is salutary, to be sure. However, this Article shows that, by way of its reformation of many advisers’ relationships with their retirement-investor customers, the “fiduciary rule” imperils retirement investors in ways that are not immediately evident and that other scholars have not noticed. First, the rule promotes a particular investment strategy — namely, passive investing — for all retirement investors, regardless of their individual needs or objectives. Second, as a thought experiment demonstrates, the rule portends a constriction of most retirement investors’ participation in the securities markets and a still-wider gap, in terms of investment opportunities and performance, between these investors and their “sophisticated” counterparts. Despite these difficulties and speculation that the Trump administration would scuttle the rule, moreover, the rule’s effects are likely enduring. Given the damage that the fiduciary rule threatens to inflict on retirement investors, the DOL’s adoption of it is an episode of failed rulemaking — one that, as this Article contends, may be traced to doctrinal factors: U.S. securities regulation is based on the notion that regulation should be neutral as among firms’ business and financial objectives and should harness, without necessarily abolishing, financial professionals’ conflicts of interest. Yet with its fiduciary rule, the DOL has effectively forsaken the principle of neutrality and deployed a scorched earth strategy against conflicts. With a view toward addressing the special concerns that shared regulatory authority creates, the Article delves into the lessons arising from this episode and how policymakers might better promote regulatory objectives and sound policy going forward.

ERISA Breach of Fiduciary Duty: Shifting the Burden Of Proving Causation To the Defendant

THE Employee Retirement Income Security Act of 1974 (ERISA) aimed to protect America's workers. It sought to decrease fraud and guard against harm to beneficiaries.1 Congress passed ERISA to protect beneficiaries from losing all they had saved because of wrongful actions of a fiduciary.2 According to U.S. Department of Labor, over half of people who worked in 2012 worked for employers sponsoring a retirement Over sixty-one million people participated in a plan in 2012.A split of authority currently exists whether beneficiary can shift burden of proving causation of losses to fiduciary. The Fourth,4 Fifth,5 and Eighth6 Circuits have held that plaintiff can shift this burden, but Second,7 Sixth,8 Ninth,9 and Eleventh10 * Circuits have held that a shift should not occur. The remaining Circuits have noted split, but they have declined to make a decision on issu* e. 1 * * * * *11 It is unclear if plaintiff must prove causation or can shift that burden to defendant. Recently, Supreme Court denied a certiorari petition on this issue.12 Consequently, circuits must determine for themselves whether and in what circumstances shifting burden to prove causation is appropriate.This article compiles status of this issue across country, analyzes arguments presented in favor of burdenshifting, and argues that burden of proof for causation should be shifted to fiduciary but only after beneficiary meets certain criteria. This shift is based on common law of trusts, which shifts burden to trustee once beneficiary proves duty, breach, and loss.13 Although trust law demands burden shift, this article also suggests shift is beneficial because defendant is in a better position to prove causation and promoting such a shift will benefit fiduciary relationships.I. BackgroundPrior to enactment of ERISA,14 employee retirement plans lacked adequate funds for plan participants.15 Participants could not easily access information about their plans, and there were many cases where fiduciaries were engaged in criminal behavior.16 While Congress attempted to address these issues with various acts of legislation, these problems persisted.17In addition to substantive problems with pension plans, there were also problems with litigation regarding pension plan fiduciary breaches.18 Benefit plans were subject to the crazy-quilt system of legal jurisdiction throughout various states governing non-collectively bargained plans.In 1962, President Kennedy appointed Committee on Corporate Pension Funds. The Committee conducted a study that concluded that prior legislation was not enough, sparking nine years of Congressional debate.20 These debates and investigations ultimately resulted in enactment of Employee Retirement Income Security Act (ERISA) in 1974.21ERISA governs most voluntarily established private-sector retirement plans.2 It requires disclosure of certain information to plan's beneficiaries and sets out standards for each plan.3 Managing each type of retirement plan requires a fiduciary.24 The Department of Labor defines role of a fiduciary as [ujsing discretion in administering and managing a plan or controlling plan's assets.25 Each plan must have at least one named fiduciary.26 This person must have control over plan's operations.27 Typically, a plan's fiduciaries will include trustee, investment advisers, all individuals exercising discretion in administration of plan, all members of a plan's administrative committee, and those who select committee officials. When a person is acting on behalf of plan, she establ ishes herself as a fiduciary.29ERISA defines a fiduciary as:Except as otherwise provided in subparagraph (B), a person is a fiduciary with respect to a plan to extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in administration of such plan. …

Clinical trial insurance coverage for cancer patients under the Affordable Care Act.

BackgroundParticipation in cancer clinical trials has been shown to increase overall survival with minimal increase in cost, but enrollment in adult cancer clinical trials remains low. One factor limiting enrollment is lack of insurance coverage, but this barrier should be reduced under the 2010 Patient Protection and Affordable Care Act (ACA), which includes a provision requiring coverage for clinical trial participation as of 2014.MethodsTo assess the number of Kansas adults aged 19–64, newly covered with health insurance for participation in oncology clinical trials as a result of the ACA, a cross sectional design using extracted data from the 2012 American Community Survey, Public Use Microdata Sample to estimate the number of individuals covered by insurance and data from the 2014 Department of Health and Human Services Health Insurance Marketplace enrollment to estimate those newly enrolled through ACA.ResultsIn 2014, there was an estimated increase of 3% (54,397; 95% CI: 44,149–64,244) for a total of 72% (1,171,041) of Kansans aged 19 to 64 with health insurance coverage for clinical trial participation.ConclusionThree main factors limit the effectiveness of the ACA provisions in expanding clinical trial coverage: 1) ‘grandfathered’ self-funded employer plans not subject to state Employee Retirement Income Security Act (ERISA) regulations, 2) Medicaid coverage limits not addressed under the ACA, 3) populations that remain uninsured. Kansas saw a negligible increase in insurance coverage as a result of the ACA thus lack of insurance coverage is likely to remain a concern for cancer patients.

Turning Labor into Capital

This article explores union attempts to control pension fund investment for the debate on financial restructuring in the United States. It puts popular control of finance into comparative and historical perspective and argues that laws and politics help explain why the flow of finance is corporate controlled. First, changes in the legal regime—the Taft-Hartley Act of 1947 and the Employee Retirement Income Security Act (ERISA) of 1974—put constraints on labor’s ability to influence investment decisions. This is evident when comparing single- and multi-employer plans, where the laws had different consequences. Second, attempts to reform these laws failed. Had they been successful, Carter’s proposed economic revitalization plan in the run-up to his failed reelection in 1980 would have created new ways for unions to control and redirect retirement investment for social purposes. The reform failure is treated as a “suppressed historical alternative” through a comparison with a successful reform in Quebec, Canada, which gave unions broad controls over the Solidarity Fund in 1983. The findings suggest, somewhat counter-intuitively, that legal restrictions need to be loosened for democratic control of finance to be possible. For pension funds, more regulations led to more corporate control, not less.

Destructive Federal Preemption of State Wealth Transfer Law in Beneficiary Designation Cases: Hillman Doubles Down on Egelhoff

Many state probate codes contain a so-called divorce revocation provision, applicable both to probate and non-probate transfers. Such statutes address the situation in which a transferor’s will or will substitute designates as a beneficiary a person who was the transferor’s spouse at the time that the transferor executed the document, but whom the transferor later divorced. The premise of these statutes is that divorce entails a profound change of circumstances not foreseen by the transferor, and that the transferor is unlikely to have intended to benefit an ex-spouse. Accordingly, the intent-implementing purpose of wealth-transfer law is better served by a default rule that treats the subsequent divorce as having revoked any provision for the now-ex-spouse unless the document expressly provides otherwise. In Egelhoff v. Egelhoff, 532 U.S. 141 (2001), the Supreme Court held that when the instrument of transfer is a beneficiary designation in a pension plan or life insurance policy subject to federal regulation under the Employee Retirement Income Security Act (ERISA), the otherwise applicable state divorce revocation statute is preempted, even though ERISA makes no mention of divorce revocation. The Court reasoned that enforcing the state divorce revocation statute would interfere with nationally uniform plan administration. Because the result in Egelhoff allowed supposed plan-level administrative convenience to defeat the principled objective of the divorce revocation statutes, a number of courts reacted by allowing so-called post-distribution relief, in some cases pursuant to a state statute so providing. Obeying Egelhoff, these courts preempted the state divorce revocation law at the plan level, thereby permitting the ex-spouse to receive the designated benefit from the plan, but allowing the person(s) entitled under the divorce revocation statute to recover those proceeds from the ex-spouse in a subsequent state-court action based on unjust enrichment. In a 2013 decision, Hillman v. Maretta, involving an insurance policy purchased under a program for federal employees, the Supreme Court extended preemption to forbid such post-distribution relief. In this essay, I point to serious shortcomings in the reasoning and policy merits of Egelhoff and Hillman. There is no federal policy favoring wealth transfer to ex-spouses. The divorce revocation statutes exemplify the core policy value of state wealth transfer law, which is to implement transferor’s intent, a policy distinct from and congruent with the purposes of the federal statutes on which the Court based preemption in Egelhoff and Hillman. Unless Congress intervenes or the Court permits the development of a federal common law of divorce revocation, Egelhoff and Hillman will saddle American wealth transfer law with needlessly contradictory rules, sometimes applicable to different transfers by the same transferor.

Will the Department of Labor Find the Missing Fiduciary Link?

Within 90 days, the Department of Labor (DOL) will substantially expand the definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA). In large part the traditional five-part test from 1975 has been discarded, and some form of the new two-prong test will become the rule. The proposed regulations are the first such changes in almost 35 years and will drastically change the relationship of investment advisors and entities with plan sponsors subject to Title I of ERISA or plans, persons and entities subject to Sec. 4975 of the Internal Revenue Code of 1986 (among other amendments, ERISA added Code Sec. 4975 imposing an excise tax on certain “prohibited transactions.” The prohibited transactions described in Code Sec. 4975 are substantially similar to prohibited transactions contained in ERISA. Such prohibited transactions will greatly increase under the DOL’s proposed rule). The DOL has a unique opportunity to advance the view that the sole interest rule is unsound, particularly in this investment advisory context, and propose how it should be modernized. Furthermore, the present prudent-person rule should be updated by entitling a trustee to seek and to pay for investment advice but then inalterably devising the trustee as financial guarantor for any breaches committed by the investment advisor. In addition, the exclusive-benefit rule precludes employers from being beneficiaries under ERISA. As a result, courts have been forced to indulge in pretense, such as the notion that benefits to employers are merely “incidental,” in order to reconcile ERISA with the economic realities of who is the beneficiary and to what extent. Moreover, the proposed rule should not apply to individual retirement account rollovers, at least until these other changes have been properly incorporated into the investment, regulatory and judicial environs. This article concludes by providing such a DOL proposal in a final form.

Private Pension Protections since ERISA: The Expanded Role of the Individual

Designed to provide security and equity to defined benefit (DB) pension plans, the Employee Retirement Income Security Act (ERISA) became law in 1974. Since that time, the economy has shifted to a more globalized, non-unionized, service-based environment, where defined contribution (DC) plans replaced DB plans as the dominant type of private pension plan. Today workers and retirees bear the burden of managing their pension plans and the associated risks. To protect Americans against the financial risks they face in retirement and ensure greater economic security in old age, targeted financial education, research, and fundamental pension policy reform are required.

The Journey to LDI and Beyond

The management of corporate pension plan assets has changed more in the past five years than in the previous three decades since the passage of the Employee Retirement Income Security Act (ERISA). It is probably not a huge stretch to say that in another five years, the core ethos and philosophy of plan asset management will bear little resemblance to how assets were generally managed over the ’70s, ’80s, ’90s, and the “aughts” before 2006. This article first addresses the nature of the regulatory and accounting changes responsible for the pension asset management paradigm shift, and then discusses the tools and frameworks associated with LDI. Specifically, the authors focus on: i) the value of reducing both asset allocations and liabilities to a common set of principal factors and what this means to constituent risks of the pension plan; ii) the recent rise in the implementation of glide path or dynamic de-risking strategies and the potential usefulness of risk factors to fine-tune glide path strategies for enhanced efficiency in risk reduction; iii) additional fine-tuning of glide paths through the use of derivatives; and finally, iv) some thoughts on the future as to what a largescale move may mean for some asset markets and how the LDI framework may evolve in the coming years.

Islamic Law Meets ERISA: How America’s Private Pension System Unintentionally Discriminates Against Muslims and What to Do About It

This article asks whether Muslims whose religious beliefs prevent investment in their employers’ private pension plans have a right to religious accommodation. This is a real issue for a growing part of the population whose spiritual lives are governed by rules that prohibit the giving or taking of interest. As one might expect, the investments available through most American pension plans involve some aspect of interest making those investments unsuitable retirement vehicles for devote Muslims. Consequently, in order to secure their retirement income, Muslims are faced with either violating their religious beliefs, losing years of investment opportunity as they wait for the American investment market to catch up to their religious needs, relying on their employer’s goodwill, or religious accommodation through court or statute. Religious accommodation in the workplace is governed by the Equal Employment Opportunity Act (Title VII). The statute is directive and punitive. There are potential money damages if an employer does not comply with Title VII’s religious accommodation requirement but no benefit (monetary or otherwise) in exchange for compliance. The two Supreme Court decisions that look at religious accommodation under Title VII concern private employers asked to rearrange employee work schedules to accommodate Sabbatarians. Where the employer faced a potential penalty for failure to provide religious accommodation but no benefit for compliance with the statute’s requirements, the Court treated the Title VII accommodation obligation as an Establishment of religion and as a burden on the non-believers’ Free Exercise rights. Accordingly, the Court diminished Congress’ religious accommodation rule under Title VII to the point that no motivated employer need ever accommodate an employee’s religious practice.Not all religious accommodations occur in the same context. As opposed to religious accommodation under Title VII, the Court generally gives Congress great deference when the legislature bestows tax benefits in exchange for taxpayers eschewing even constitutionally protected activities. Private pension plans are founded on tremendous tax benefits bestowed on retirement accounts by the Employee Retirement Income Security Act (ERISA). These benefits invoke the deference to Congress exhibited in the Court’s tax decisions rather than the hostility to forced religious accommodation reflected in its Title VII decisions.

Maintaining Health Laboratories of Experimentation: Federalism, Health Care Reform, and ERISA

In this Comment, we demonstrate the ingenuity of San Francisco's Health Care Security Ordinance and explain why local experimentation with health care solutions is an invaluable component of America's ongoing efforts to solve the national health care crisis. We then analyze the Golden Gate Restaurant Association's legal challenge to the Ordinance, which argues that the Ordinance's employer pay-or-play provision is preempted by the Employee Retirement Income Security Act (ERISA). After demonstrating that the jurisprudence surrounding ERISA's preemption clause is a model of uncertainty and ambiguity, we argue that state and local governments deserve clarity on whether ERISA preempts their pay-or-play laws, and that the political branches are best suited to resolve this issue. We conclude by proposing both legislative and administrative approaches to ERISA reform.

Self-Funding: Taking Control of an Employer’s Health Benefits Destiny Under the Patient Protection and Affordable Care Act

In an era of rising health insurance costs and new mandates built into federal reform, employers of all sizes are discovering the advantages of controlling their own destinies with self-funded ERISA (Employee Retirement Income Security Act) health plans. With a large pool of employees, employers could expect to save about 10% by paying medical claims directly rather than purchasing fully insured coverage. The key is to pick the right partners, address outlier risk with stop-loss insurance and rigorously control costs.

Selecting Benchmarking Services to Help Meet Fiduciary Requirements

Under the Employee Retirement Income Security Act (ERISA) of 1974, employers and other plan fiduciaries have a duty to ensure that all fees paid by the plan to its service providers are reasonable. Unfortunately, many plan sponsors are not equipped with the necessary expertise and resources to determine the reasonableness of the plan’s fees. This creates a serious problem for plan fiduciaries. A mounting number of lawsuits have been filed against employers on the grounds that plan fees are excessive. Although the current legal climate surrounding the 401(k) plan industry is litigious, plan fiduciaries must follow three primary rules to ensure fees paid to service providers are reasonable. Through benchmarking fees, plan fiduciaries can meet critical requirements under ERISA; however, fiduciaries need to select a reliable benchmarking service. Financial advisors can play a pivotal role in helping the plan sponsor incorporate these services into a prudent plan review process that is intended to satisfy the requirements of ERISA.

Medicaid, Underinsurance, and the Dawn of an Era for Children's Coverage

During the major economic downturns of the last 10 years, Medicaid has been a health care life preserver for vulnerable American children. From 2001 through 2003, the proportion of children (younger than 18 years) on Medicaid grew from 16.5 million (22.7% of all children) to 19.4 million (26.4%). From 2007 to 2008, Medicaid rolls grew from 20.9 million (28.1%) to 22.6 million children (30.3%).1 Although some coverage is better than none, pediatricians will wisely ask how good Medicaid coverage is. In this issue of Pediatrics , Kogan et al2 answer that question. They focus on the most vulnerable children—children with special health care needs (CSHCN). As the authors illustrate, for CSHCN in the United States the challenge of uninsurance is now overshadowed by the problem of underinsurance, defined by Kogan et al as a private or public plan that is insufficient to meet a child's needs. On the private side, the cost of health care is pricing previously affordable health plans out of families' reach, leaving them to opt for more “bare-bones” plans with less generous benefits and, consequently, more out-of-pocket costs for parents to bear. Meanwhile, public plans stretch scarce program dollars by limiting reimbursement for health care providers (thereby limiting access to patients) and scaling back on optional benefits. Who ends up worse, CSHCN with private coverage or those enrolled in public plans? Kogan et al present findings that may be surprising. In analyses appropriately adjusted for multiple sociodemographic characteristics, they … Address correspondence to Matthew M. Davis, MD, MAPP, University of Michigan, 300 N Ingalls, Room 6C23, Ann Arbor, MI 48109-5456. E-mail: mattdav{at}med.umich.edu

No Good Deed Goes Unpunished: The Alexander v. Provident Life and Accident Insurance Company Opinion and Other Consequences of Being Generous Under ERISA

A recent case from a federal district court in Tennessee reminds employers that they should familiarize themselves with the basic tenets of the Employee Retirement Income Security Act (ERISA) before providing welfare benefits to their employees. In that case, the employer unknowingly created an ERISA plan just by allowing its employees to buy individual insurance policies and obtain a group discount that they would not have received but for the employment relationship. Unknowingly creating an ERISA plan thus exposed that employer to a host of ERISA issues, including reporting and disclosure requirements, fiduciary responsibilities, and monetary penalties for violating those requirements and responsibilities.