ERISA Litigation Roundup: Second Circuit Holds Disability Benefit Claim Must Be Fully Determined on Internal Appeal Review Within 45 Days

On June 7, 2022, the Second Circuit decided McQuillin v. Hartford Life and Accident Insurance Co., No. 21-1514, holding that under ERISA and Department of Labor (DOL) regulations governing administrative benefit claims and appeals (29 C.F.R. § 2560.503-1), when considering an appeal of a denied disability claim, a plan administrator must make full determination of benefits. In doing so, the Second Circuit rejected the claim administrator’s argument that reversing the claim denial and remanding the claim internally for reevaluation satisfied the regulations — instead, a decision on whether or not benefits would be awarded was required.

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New Stats on Employer Retirement Plans

On June 8, 2022, the Congressional Research Service published “Private-Sector Defined Contribution Pension Plans: An Introduction.” We reviewed the report and wanted to highlight a few key data points. Defined contribution plans include 401(k), 403(b), and profit-sharing plans. The report does not include government employer plans.

Takeaways

Congress continues to introduce bills related to retirement security (see our Blog Post on Secure Act 2.0 and the Employee and Retiree Access to Justice Act). These new bills continue to focus on increasing access to part-time workers, easing the implementation of retirement plans for smaller employers, and encouraging plans to implement automatic enrollment features. Based on the results in this Congressional Research Service report, we can expect continued emphasis on those features. If you’d like to discuss design changes to your defined contribution plan, please contact a Faegre Drinker benefits attorney for assistance.

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IRS Pilots Pre-Examination Compliance Program for Retirement Plans

In its recent June Employee Plans newsletter, the Internal Revenue Service (IRS) announced the launch of a 90-day pre-examination compliance pilot program. Under the program, the IRS will notify a plan sponsor that its retirement plan has been selected for pre-examination. The notification will provide the sponsor with 90 days to review retirement plan documents and operations to determine compliance with current tax law. If the sponsor does not respond within 90 days, the IRS will contact the sponsor to schedule an examination.

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Supreme Court Decides Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc.

On June 21, 2022, the Supreme Court decided Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc., No. 20-1641, holding that a group health plan that uniformly provides limited benefits for outpatient dialysis to all plan participants does not violate the Medicare Secondary Payer statute (MSPS).

Individuals enrolled in Marietta Memorial Hospital’s employer-sponsored group health plan (the “Plan”) sought treatment from DaVita for end-stage renal disease (ESRD). After DaVita treated those patients, it submitted claims to the Plan for payment. The Plan paid only a small portion of those claims based on terms in its plan document applicable to all plan participants that purported to limit the reimbursement rates for renal dialysis treatments. DaVita sued the Plan and alleged that the Plans’ reimbursement limitations violated the MSPS.

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Deadline Approaches for Employers to Post Machine-Readable Files on a Public Website

The July 1st deadline is quickly approaching for non-grandfathered group health plans and issuers to publicly disclose, in accordance with the Transparency in Coverage Final Rules, price information in machine-readable files for the plan year beginning on or after January 1, 2022.   The two machine-readable files must show (1) in-network negotiated provider rates for covered items and services and (2) out-of-network allowed amounts and billed charges for covered items and services.

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