Federal District Court Invalidates Some Surprise Billing Rules: What It Means for the No Surprises Act

On February 23, 2022, the United States District Court for the Eastern District of Texas invalidated portions of Part II of the interim final rule (“IFR”) issued by the U.S. Departments of Health and Human Services, Labor, and Treasury (“Tri-Agencies”), implementing the dispute resolution provisions of the No Surprises Act (“NSA”).  While the ruling in the case, Texas Medical Association v. U.S. Department of Health & Human Services, may impact medical plan costs, it does not substantively affect the consumer protections against surprise medical billing added by the NSA, which took effect in 2022.

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New COVID-19 Guidance: Government Requires Health Plans to Cover At-Home COVID-19 Tests

On January 10, 2022, the Departments of Health and Human Services, Labor and Treasury issued guidance addressing a group health plan’s obligation to cover the cost of over-the-counter, at-home COVID-19 tests starting January 15, 2022.  The new coverage requirement means that enrolled individuals can go online or to a pharmacy and buy an over-the-counter FDA-approved COVID-19 diagnostic test and either have it paid for up front by their health plan or be reimbursed by submitting a claim without any cost-sharing requirements (such as deductibles, co-payments or co-insurance).  The guidance provides that beginning January 15, 2022 through the end of the declared public health emergency, plans must cover at least eight (8) over-the-counter at-home tests per enrolled individual per 30-day (or calendar-month) period without an assessment or provider involvement.  This does not affect the obligation to provide coverage for COVID-19 tests with a provider’s involvement or prescription.

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Department of Labor Issues New Guidance on Private Equity Investments in Individual Account Plans

On December 21, 2021, the Department of Labor (DOL) issued additional guidance on the use of private equity investments in certain retirement plans, warning that most plan fiduciaries will not have enough experience to adequately evaluate such investments.

The DOL’s guidance relates to a June 3, 2020 “information letter” (which is a non-binding statement) issued by the Employee Benefits Security Administration of the DOL . In that information letter, the DOL addressed private equity investments in “designated investment alternatives” (or DIAs) offered to participants in individual account plans, like 401(k) plans, considered whether ERISA prohibits offering certain private equity investments to participants in individual account plans.

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Department of Labor Proposal Would Encourage Consideration of ESG Factors for Plan Investments

On October 13, 2021, the Department of Labor (DOL) released a new proposed regulation under ERISA that would replace the previous administration’s “pecuniary factors” rule – which is widely viewed as discouraging the use of environmental, social, and governance (ESG) factors when selecting plan investments – with one that would encourage their consideration and provide a clearer pathway for plan fiduciaries to do so.

Background

Over the years, the DOL’s stated position on the consideration of ESG and other “social” factors when selecting plan investments has toggled back and forth, largely along party lines.

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Thinking ESOPs: Court Rejects DOL Claims of ESOP Overpayment

The board of directors of Bowers + Kubota Consulting, Inc. recently won an employee stock ownership plan (ESOP) fiduciary/breach case brought against them by the Department of Labor. See Walsh v. Bowers, et al., No. 1:18-cv-00155-SOM-WRP (D. Haw. Sept. 17, 2021). After a full trial on the merits, the district-court judge entered judgment in favor of the defendants, largely based on the court’s rejection of the DOL’s critiques of the valuation upon which the trustee relied. What is perhaps most interesting about the court’s decision is the contrast between the discussion in this case of fundamental ERISA and valuation concepts, on the one hand, and the discussion of fundamental ERISA and valuation concepts in two other cases in which courts entered judgment against the defendants.

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New DOL FAQs Provide Guidance Regarding Lifetime Income Illustrations for Defined Contribution Plans

On July 26, 2021, the Department of Labor (Department) issued frequently asked questions (FAQs) regarding the interim final rule (IFR) on lifetime income illustrations (LIIs) that must be included in participants’ pension benefit statements for defined contribution plans on an annual basis. The IFR on LIIs, which we previously discussed in a client alert, will become effective on September 18, 2021. The FAQs respond to comments received in response to the IFR regarding the applicability date of the rules and method for furnishing benefit statements.

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ERISA Litigation Roundup: The DOL Determines That Audio Recordings Must Be Produced Under ERISA’s Claim Regulations

On June 14, 2021, the Department of Labor (DOL) issued an information letter stating that plan fiduciaries have a duty under ERISA’s claim regulations to produce upon request recordings or transcripts of phone calls between benefit claimants and plan representatives regarding their benefit claims. The DOL letter is a call for plan administrators to revisit and potentially refine their processes for recording and storing such conversations.

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Disclosure of Claims-Related Audio Recordings

Claims-related audio recordings may need to be disclosed to claimants upon request, according to an information letter dated June 14, 2021 (“Information Letter”), issued by the Department of Labor’s (“DOL”) Employee Benefits Security Administration (“EBSA”). Although DOL information letters are not binding, as a result of the Information Letter, claimants may start to request audio recordings of conversations relating to benefit denials. Plan sponsors and claims administrators should be prepared for these requests and should train personnel handling telephone calls with claimants accordingly.

The Information Letter addresses whether ERISA and DOL claims procedures regulations thereunder require a plan fiduciary to provide, upon a claimant’s request, a copy of an audio recording and transcript of a telephone conversation between the claimant and a representative of the plan’s insurer regarding a benefit denial. The request at issue in the Information Letter was denied by the claims administrator on the basis that “recordings are for ‘quality assurance purposes,’” and “are not created, maintained, or relied upon for claim administration purposes, and therefore are not part of the administrative record.” The claims administrator maintained that the actual recording is distinct from the notes made available to the claimant, which contemporaneously documented the content of the recorded conversation, and which became part of the “claim activity history through which [the insurer] develops, tracks and administers the claim.”

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Biden Directs DOL to Consider Rescinding Trump-Era Rule on Environmental, Social and Governance Investing

President Biden signed an executive order on May 20 on climate-related financial risk that seeks to change the rules regarding the use of environmental, social, and governance (ESG) investments in retirement plans. The order specifically directs the Employee Benefits Security Administration (EBSA) bureau of the Department of Labor (DOL) to consider suspending, revising, or rescinding the Trump-era “Financial Factors in Selective Plan Investments” rule regarding ESG retirement investments. The executive order is consistent with the expectation that the Biden administration will move to encourage the consideration of ESG factors when selecting retirement plan investments given the emphasis on climate change initiatives.

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The DOL Provides Practical Guidance on the Application of PTE 2020-02

As described in our recent blog posts, the Department of Labor (“DOL”) recently issued guidance in the form of FAQs to address questions concerning the practical application of PTE 2020-02, Improving Investment Advice for Workers & Retirees.  This blog post discusses the guidance the DOL offers with respect to various topics under PTE 2020-02.  Guidance with respect to the general requirements of PTE 2020-02 was discussed in our prior blog post and the DOL’s guidance with respect to the application of PTE 2020-02 to rollover recommendations was discussed in our prior blog post.

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