Health and Welfare Plans

Our colleague Stuart Gerson of Epstein Becker Green posted “DC Circuit Stays Halbig Action Pending SCOTUS Review of King, Upholds Accommodation for Contraceptive Coverage” on the Health Law Advisor blog. Following is the full text:

Only last week, we informed you of the Supreme Court’s somewhat surprising grant of cert. in the Fourth Circuit case of King v. Burwell, in which the court of appeals had upheld the government’s view that the Affordable Care Act makes federal premium tax credits available to taxpayers in all states, even where the federal government, not the state, has set up an exchange.

The Administration has taken something of a PR buffeting in the week following, after its principal ACA technical advisor’s comments on this issue were made public.

In any event, we suggested that the scheduled DC Circuit en banc argument in Halbig v. Burwell, which raises the same issue as the King case, would never take place. We were correct. The DC Circuit yesterday stayed action in its case pending Supreme Court resolution of King. We’ll continue to follow related developments.

Speaking of the DC Circuit, a panel of its most liberal judges today upheld religious organization accommodation for contraceptive coverage under the ACA, holding under Hobby Lobby that opt-out procedure does not substantially burden employer’s religious beliefs. Priests for Life v. U.S. Dep’t of Health & Human Services. There will be similar cases brought in other federal circuits, and we’ll report on those as well.

By Stuart M. Gerson

While by most accounts the current term of the Supreme Court is generally uninteresting, lacking anything that the popular media deem to be a blockbuster (the media’s choice being same-sex marriage or Affordable Care Act cases), the docket is heavily weighted towards labor and employment cases that potentially affect employers in all industries including  retail, health care, financial services, hospitality, and manufacturing.  In chronological order of argument they are as follows.

The Court already has heard argument in Integrity Staffing Solutions, Inc. v. Busk, No. 13-433, which concerns whether the Portal-to-Portal Act, which amends the Fair Labor Standards Act, requires employers to pay warehouse employees for the time they spend, which in this case runs up to 25 minutes, going through post-shift anti-theft screening. Integrity is a contractor to Amazon.com, and the 9th Circuit had ruled in against it, holding that the activity was part of the shift and not non-compensable postliminary activity. Interestingly, DOL is on the side of the employer, fearing a flood of FLSA cases generated from any activity in which employees are on the employers’ premises.  This case will affect many of our clients and should be monitored carefully.

On November 10th, the Court will hear argument in M&G Polymers USA,  LLC v. Tackett, No. 13-1010, which I see as an important case, though most commentators don’t seem to realize it. The question involves the so-called “Yard-Man Presumption” in the context of whether the courts should infer that silence as to the duration of retirement health insurance benefits established under a CBA are meant to apply for the lifetimes of covered retirees.

In two other cases involving an issue of discretion and judicial review set for argument on December 1st, Perez v. Mortgage Bankers Ass’n, No. 13-1041; and Nichols v. Mortgage Bankers Ass’n, No. 13-1052, the Court will decide whether DOL violated the Administrative Procedure Act by not affording notice-and-comment rulemaking to a reversal of a wage and hour opinion letter issued in 2006.  The DC Circuit ruled against DOL in both cases (one in which DOL is the petitioner; another in which affected loan officers are petitioners), rejecting DOL’s contention that the policy change was an “interpretive rule” not subject to APA notice-and-comment strictures. The case at bar itself doesn’t involve much, but as a precedent concerning how free agencies like DOL (a particular worry to employers during this administration), are to regulate unilaterally, free of judicial oversight it will be important, especially in the DC Circuit where there are so many agency cases.

On December 3rd, the Court will hear argument in Young v. United Parcel Service, Inc., No. 12-1226, which poses whether the Pregnancy Discrimination Act requires an employer to accommodate a pregnant woman with work restrictions related to pregnancy in the same manner as it accommodates a non-pregnant employee with the same restrictions, but not related to pregnancy. The 4th Circuit had ruled in favor of the company, which offered a “light duty program” held to be pregnancy blind to persons who have a disability cognizable under the ADA, who are injured on the job or are temporarily ineligible for DOT certification. Ms. Young objects to being considered in the same category as workers who are injured off the job. This case, too, will create a precedent of interest to at least some of our clients. Of  note, last week United Parcel Service sent a memo to employees announcing a change in policy for pregnant workers advising that starting January 1, the company will offer temporary light duty positions not just to workers injured on the job, which is current policy, but to pregnant workers who need it as well. In its brief UPS states “While UPS’s denial of [Young’s] accommodation request was lawful at the time it was made (and thus cannot give rise to a claim for damages), pregnant UPS employees will prospectively be eligible for light-duty assignments.”  The change in policy, UPS states, is the result of new pregnancy accommodation guidelines issued by the Equal Employment Opportunity Commission, and a growing number of states passing laws mandating reasonable accommodation of pregnant workers.

In a case not yet fully briefed or set for argument, Mach Mining LLC v. EEOC, No.13-1019, the Court will  decide whether the EEOC’s pre-suit conciliation efforts are subject to judicial review or whether the agency has unreviewable discretion to decide the reasonableness of settlement offers. The Seventh Circuit has ruled in favor of the EEOC in the instant case, but every other Circuit that has considered the matter has imposed a good-faith-effort standard upon the EEOC.

On October 2nd, the Supreme Court granted cert. in a Title VII religious accommodation case, EEOC v. Abercrombie & Fitch Stores, Inc., No. 14-86. The case concerns whether an employer is entitled to specific notice, in this case  of a religious practice – the wearing of a head scarf —  from a prospective employee before having the obligation to accommodate her.  In this case, the employer did not hire a Muslim applicant. The Tenth Circuit ruled that the employer was entitled to rely upon its “look” policy and would not presume religious bias where the employee did not raise the underlying issue. Retail clients and others will be affected by the outcome.

Finally, also on October 2nd, the Supreme Court granted cert. in Tibble v. Edison Int’l, which raises the issue of whether retirement plan fiduciaries breach their duties under ERISA by offering higher-cost retail-class mutual funds when identical lower-cost institutional class funds are available and the plan fiduciaries initially chose the higher-cost funds as plan investments more than six years (the notional statute of limitations) before the claim was filed. This issue has been around for years and the Court finally will resolve it.   The dueling rationales have been discussed in depth on many financial pages, for example recently in the New York Times. The potential importance of the case relates to whether trustees have a separate duty to reconsider their past decisions under a continuing violation theory that would supersede ERISA’s statute of limitations. The Solicitor General, in an amicus brief, argued on behalf of the United States that trustees of ERISA plans owed a continuing duty of prudence, which they breach by failing to research fund options and offer available lower-cost institutional-class investments during the six-year period prior to the filing of the complaint. The Court apparently took the case on the SG’s recommendation that noted the unresolved split on the issue in the Circuits.  If the Solicitor General proves correct, and the Petitioner prevails, fiduciaries all across the employment spectrum will be exposed to greater risk of scrutiny for their past actions.

More will follow as developments warrant.

by: Adam C. Abrahms, Kara M. Maciel, Adam C. Solander, and Steven M. Swirsky

On September 13, 2013, the Obama Administration rejected the union movement’s intense  lobbying efforts to seek a waiver, so that their members would be able to receive tax subsidies in the Affordable Care Act (“ACA”) Marketplaces for those of their members who will be offered “affordable coverage” from their employers.

Beginning January 1, 2015, the ACA requires that large employers offer affordable health coverage that provides minimum value to their “full-time employees” (those working 30 hours or more per week) or pay a penalty.  If an employee is not offered health insurance, or if the coverage offered does not meet the definition of “affordable” or does not provide minimum value, the employee may go to the Marketplace (formerly known as the Exchanges) to purchase coverage.  In such cases, certain employees may receive a tax credit or premium subsidy in the Marketplace to help defray the cost of obtaining health coverage.

For many unionized employees, health care is provided through a Taft-Hartley multi-employer plan.  Such plans will be required to be affordable and comply with the ACA’s plan design obligations, just like private employer-sponsored health plans.  Employees who reject employer-sponsored coverage that complies with the ACA in order to obtain cheaper coverage through the Marketplace are not entitled to the same tax breaks as uninsured employees.

Labor lobbied hard for the ACA and spent millions getting President Obama elected several years ago.  Now, much of labor has grown disenchanted by the Administration’s regulatory rulings and ObamaCare as a whole.  This summer, labor union leaders from UFCW, UNITE-HERE, and the Teamsters sent a scathing letter to Congressional leaders criticizing the ACA’s new definition of a “full-time employee,” stating that “it will destroy the American workforce.”  Labor unions – who depend on the promise of free or cheap health care to attract members – fear they will lose members and their leverage to organize new dues-paying members if employees can go to the Marketplace to obtain less expensive health care.

Big labor, however, wants to have its cake and eat it too.  While the Taft-Hartley plan trust funds continue to unilaterally impose annual premium cost increases for the health and welfare plans covering many unionized employees, in recent weeks, labor has demanded ACA reforms providing tax breaks for unionized employees who receive coverage under these plans.  Under their waiver plan, unionized employees (but not non-unionized employees) would get the same tax breaks as uninsured workers if their members want to purchase coverage in the Marketplace.  Last week during the AFL-CIO Quadrennial Convention, the labor giant adopted a harsh resolution calling for these and other pro-labor changes to the ACA.

Days before, in anticipation of the AFL-CIO Resolution, Senator Orrin Hatch (R-UT) and Representative Dave Camp (R-MI) sent a letter to the Obama Administration cautioning that any such pro-labor carve outs to the ACA would be ill-advised and unconstitutional.  On Friday, in a letter responding to Senator Hatch and Congressman Camp, the Administration rejected the labor movement’s proposal and responded with the message that union-represented employees should be treated the same under the ACA as any other employee offered affordable coverage from his or her employer.  According to the Administration’s letter, [t]he conclusion that an individual cannot benefit from both the exclusion from taxable income for employer-provided health coverage under such a plan and the premium tax credit  provided by the ACA applies whether the individual is covered by a single-employer plan or a multi-employer Taft-Hartley plan.

It is unclear whether organized labor will respond with formal calls for repeal or amendment of the ACA, but with this issue of a potential double standard sought by labor unions currently behind them, employers should focus on future compliance obligations under the ACA.  Such compliance obligations include the upcoming October 1 Marketplace notice deadline, the creation of the Marketplaces, the Individual Mandate taking effect in 2014, and the Employer Mandate and associated reporting requirements in 2015.

A recent article in Bloomberg BNA’s Health Insurance Report will be of interest: “ACA’s Employer ‘Pay or Play’ Mandate Delayed – What Now for Employers?” by Frank C. Morris, Jr., and Adam C. Solander, colleagues of ours, based in Epstein Becker Green’s Washington, DC, office.

Following is an excerpt:

The past few weeks have changed the way that most employers will prepare for the employer ‘‘shared responsibility” provisions of the Affordable Care Act (ACA). Over the past year or so, employers have scrambled to understand their obligations with respect to the shared responsibility rules and implement system changes, oftentimes with imperfect information to guide their efforts to comply with ACA.

Understanding the difficulties that both employers and the health insurance exchanges or marketplaces would have, the Internal Revenue Service (IRS) on July 2 issued a press release stating it would delay the shared responsibility provisions and certain other reporting requirements for one year, until Jan. 1, 2015.

On July 9, the IRS published Notice 2013-45 (Notice), providing additional information on the one-year delay. Specifically, the following three ACA requirements are delayed:

  1. The employer shared responsibility provisions under Section 4980H of the Internal Revenue Code (Code), otherwise known as the employer mandate;
  2. Information reporting requirements under Section 6056 of the Code, which are linked to the employer mandate; and
  3. Information reporting requirements under Section 6055 of the Code, which apply to self-insuring employers, insurers, and certain other providers of ‘‘minimum essential coverage,” as defined by ACA.

The IRS notice clarifies that only the above three requirements are delayed. The notice does not affect the effective date or application of other ACA provisions, such as the premium tax credit or the individual mandate. Given the fact that the law itself is not delayed, the notice has raised significant issues for employers despite their being generally pleased with the mandate and penalty delay. This article will discuss the impact of the delay and some of the issues that employers should consider as a result of the delay.

Click here to download the full article in PDF format.

The attached file is reproduced with permission from Health Insurance Report, 19 HPPR 28, 7/31/13. Copyright © 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

Evan Rosen and Mark M. Trapp of the Labor and Employment practice co-wrote an article titled “What To Know About ACA Collective Bargaining”

Following is an excerpt:

For the unionized employer, the advent of the Affordable Care Act requires careful strategic thought about its impact on upcoming collective bargaining negotiations. Indeed, for companies with a unionized workforce, the ACA poses additional challenges and strategic considerations above and beyond those confronting nonunionized workforces.

Click here to read the full article.

Please join Epstein Becker Green’s Health Care & Life Sciences and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on employers and their group health plans.

In less than a year, employers employing at least 50 full-time employees will be subject to the Employer Shared Responsibility provisions. Under these provisions, if employers do not offer health coverage or do not offer affordable health coverage that provides a minimum level of value to their full-time employees, they may be subject to a tax penalty under the proposed regulations just issued by the Internal Revenue Service.

During this program, Epstein Becker Green practitioners will:

  • Review the basics of the Employer Shared Responsibility provisions and proposed regulations
  • Define employer status under the proposed regulations
  • Clarify the definition of “full-time” employees and dependents who must be offered coverage
  • Discuss the determination of affordable and minimum value coverage
  • Review employer liabilities and penalties

This is the third session in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act.   Please stay tuned for upcoming webinars on:

  • Exchange Implementation
  • Essential Health Benefits
  • Quality Reporting
  • And others…

Epstein Becker Green Presenters:

 Mark E. Lutes

 Frank C. Morris, Jr.

Adam C. Solander

Wednesday, January 9, 2013

 1:00 – 2:00 pm EST  / 10:00 – 11:00 am PST

Registration Is Complimentary and Webinar Space Is Limited.  Don’t Miss This Opportunity!

  To Register, please click here.

Contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com for more information.  If you missed the first two webinars in the New ACA Implementation Regulation series, the audio recording and presentation slides are now available.

Frank C. Morris, Jr., Member of the Firm in the Litigation, Labor and Employment, and Employee Benefits practices is speaking at the 36th Annual National Labor & Management Conference on the topic of the Affordable Care Act and associated compliance issues facing employers and health and welfare funds.

The National Labor and Management Conference is recognized as one of the most outstanding labor and management programs in the United States, promoting discussion and collaboration on many levels. The program annually unites a diversity of labor and management leaders from across the country to address key issues affecting both labor and management.

Confirmed speakers for 2013 include: James P. Hoffa, President, United Brotherhood of Teamsters, Sean McGarvey, President,  Building Construction Trades Department, AFL-CIO, Leo W. Gerard, President, United Steelworkers, Craig Alexander, Chief Economist, TD Bank and others.

Please join Epstein Becker Green’s Health Care & Life Sciences, Employee Benefits, and Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on employers and their group health plans and programs.

Since the Presidential election, The U.S. Department of Health and Human Services is moving quickly to implement the Affordable Care Act. Rules have been released in the past few weeks concerning participation in federal exchanges, discrimination based on pre-existing conditions, essential health benefit requirements, and expanded employment-based wellness.

During this program, Epstein Becker Green practitioners will:

  • Review the ACA implementation timeline
  • Discuss the structure of the law and basic concepts affecting employers
  • Discuss critical employer decision making and planning for 2014
  • Review alternative plan design options available to employers

This is the second in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act. Please stay tuned for upcoming webinars on:

  • Exchange Implementation
  • Shared Responsibility
  • Calculation of Full-time Employees
  • Quality Reporting
  • And others…

Presenters: Gretchen Harders Frank C. Morris, Jr. Adam C. Solander

Registration Is Complimentary and Seating Is Limited

Don’t Miss This Opportunity! To Register, please click here.

In addition to this blog, EBG’s PPACA and HEAL blogs will also post ACA regulatory developments.

For additional Information, please contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com.

Please join Epstein Becker Green’s Health Care & Life Sciences and Labor & Employment practitioners in a webinar series for employers.  Registration is complimentary.

On Friday, November 30, Epstein Becker Green attorneys Frank C. Morris, Jr., and Adam C. Solander offered a one-hour webinar titled “The New Wellness Program Regulations, Part of a Webinar Series on the New ACA Implementation Regulations: Employer Impact.”

The webinar discussed:

  • Proposed regulations and the impact these regulations could have on your overall wellness strategy
  • Areas where employer comment is needed
  • Recent wellness litigation trends
  • Where EEOC fits in the picture

The audio recording and presentation slides for “The New Wellness Program Regulations” webinar are now available and you may contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, to obtain a password to download the files.

This was the first in the Employer Affordable Care Act Webinar Series for employers on upcoming rules and regulations implementing the Affordable Care Act.  Please stay tuned for upcoming webinars on:

  • Exchange Implementation
  • Shared Responsibility
  • And others …

In addition to this blog, EBG’s PPACA blog will also post regulatory developments.

For additional Information, please contact Elizabeth Gannon at 202/861-1850 or egannon@ebglaw.com, or Lisa Blackburn at 202/861-1887 or lblackburn@ebglaw.com.