APRIL 2009 NEWSLETTER
In this issue:

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ARRA’s Impact on COBRA: What’s all the Fuss?

 

 

 

 

abagley@cgwg.com

The American Recovery and Reinvestment Act (ARRA) of 2009, signed by President Obama on February 17, 2009, provides a temporary subsidy for employees, and their beneficiaries, (1) who are plan participants in a COBRA qualified health plan, (2) who elect COBRA, and (3) whose qualifying event is related to “involuntary termination” of covered employment that occurs between September 1, 2008, and December 31, 2009. These individuals are termed as “assistance eligible individuals” or “AEIs.” The federal subsidy covers 65% of the COBRA premium charged to the former employee. This subsidy is available for a maximum of 9 months, but could end earlier if the AEI becomes eligible, for example, for coverage under another group health plan or Medicare. In short, the AEI, for the 9 month period, is only responsible for 35% of the COBRA premium. The statute, as written, does not define “involuntary termination,” but it is anticipated that the Department of Labor (DOL) will be issuing guidance on this definition in the upcoming weeks.

The 65% federal subsidy payment must go to the entity where the qualified beneficiary pays his or her federal COBRA premiums. These reimbursements take the form for a credit against payroll taxes the plan or employer would otherwise pay to the Treasury Department. Consequently, the employers are put in a position where they must pay upfront the 65% of the COBRA premium and receive reimbursement for that payment in the form of a payroll tax credit. Notably, the AEIs, however, must pay their discounted 35% of the COBRA premium before the plan can claim the tax subsidy. It is insufficient for employers who are attempting to claim the subsidy to rely on the fact that an AEI’s COBRA payment is due on a certain date; rather, the employer must have knowledge of actual payment. Employers should make sure to update IRS Form 941 (available on the IRS website), which includes lines for the new payroll tax credit.

Notice must be given to all employees involuntarily terminated between September 1, 2008, and December 31, 2009, that would otherwise qualify for COBRA. An AEI who had been eligible for the subsidy but had not elected COBRA at the date of this legislation, will now be given an additional opportunity to elect it. Notably, the election of will not extend the total period of available COBRA coverage measured from the date the person lost coverage as an active employee. Moreover, AEIs are entitled to elect coverage under the plan of benefits offered to them at the time of the qualifying event, i.e., the time of involuntary termination. Employer-funded health plans must explain the availability of the premium subsidy when it gives COBRA election material to AEIs, whether or not the AEI elected COBRA at that time. This notice must be provided to those individuals by April 18, 2009, and model notices, published on March 19, can be located at the DOL website at www.dol.gov/COBRA.

Group health plans should take the following action immediately to comply with The American Recovery and Reinvestment Act of 2009:

If you have any questions about this article or the new changes in COBRA, please contact Amber Bagley.

 

 

 

 

On March 2, 2009, the Equal Employment Opportunity Commission (“EEOC”) issued its proposed regulations implementing and interpreting the Genetic Information Nondiscrimination Act of 2008 (“GINA”). GINA, which will become effective on November 21, 2009, prohibits discrimination by an employer against any individual based on genetic information and prohibits the collection or disclosure of genetic information on any employee. The intent behind GINA is to encourage individuals to take part in genetic testing as part of their medical care without fear that they will be charged a higher premium by their health insurance plan or that employment-related decisions will be based on the genetic predisposition of developing a disease in the future.

The EEOC has clarified and reiterated several components of the statute in its proposed regulations, which are open for public comment until May 1, 2009. The proposed regulations clarify the definitions of employee, employer, and covered entity. For example, “employee,” as used in GINA, includes applicants and former employees. The proposed regulations also define six terms that do not appear in other employment statutes: family member, family medical history, genetic information, genetic monitoring, genetic test, and manifestation/manifested. The EEOC specifically seeks comments on these definitions.

The proposed regulations also provide examples of actions that would violate GINA, such as re-assigning someone whom the employer learned had a family medical history of heart disease from a job it believed would be too stressful and might eventually lead to heart-related problems for the employee. Moreover, the proposed regulations reiterate that retaliation is prohibited. Notwithstanding the foregoing, the regulations make it clear that neither the statute nor the proposed regulations creates a cause of action for disparate impact.

The proposed regulations also address in detail each of the six exceptions to the rule that an employer may not acquire genetic information. The exceptions are: 1) inadvertently requesting or requiring genetic information; 2) offering health or genetic services, including those offered as part of a voluntary wellness program; 3) requesting such information in conjunction with the Family and Medical Leave Act; 4) where such information is available commercially and/or publicly; 5) genetic monitoring; and 6) where an employer that conducts DNA analysis for law enforcement purposes requires genetic information for quality control purposes to detect sample contamination. The EEOC specifically seeks comments on what constitutes “voluntary” with respect to the employer-provided wellness program exception; what should be included in the “commercially and publicly available” exception, particularly with respect to blogs and social networking sites; and how the law enforcement exception should be applied.

If you would like more information on the proposed GINA regulations, please contact our firm for assistance.

New Mandatory Medicare Notice and Reporting Requirements

 

 

 

 

On July 1, 2009, the amendments to Section 111 of the Medicare, Medicaid, and SCHIP Extension Act (MMSEA), take effect, which drastically changes the notice and reporting requirements under the Medicare Secondary Payer Statute (MSP) relating to workers' compensation, liability (including self-insurance) and no-fault claims.

What is Medicare Secondary Payer (MSP)?

MSP refers to those situations where Medicare does not have primary responsibility for paying the medical expenses of a Medicare beneficiary. In other words, Medicare becomes the “secondary payer” for medical expenses to the extent that payment has been made or can reasonably be expected to be made under a “primary plan.”

What is a primary plan?

A primary plan (or policy) includes a group health plan, workers’ compensation insurance plan, a liability insurance plan (including self-insured plans), or a no-fault insurance plan. Note: prior to the amendments, group health plans (GHPs) were already obligated to comply with notice and reporting requirements; however, the additional reporting requirements for GHPs under the new rules became effective on January 1, 2009.

Who must report the information?

Insurers, third-party administrators (TPAs), and administrators or fiduciaries of primary plans or policies are required to comply with the notice and reporting requirements.

What triggers the notice and reporting requirements?

In general, the notice and reporting requirements are triggered (1) upon a claim resolution (full or partial) from a settlement, judgment, award, or other payment after July 1, 2009, and (2) where the responsible reporting entity (RRE) has accepted ongoing responsibility for medical payments. Accordingly, when a claim under a primary plan has been filed, insurers must determine whether the claimant (e.g., potential Medicare beneficiary) is entitled to Medicare benefits on any basis. If the claimant is entitled to Medicare benefits, Medicare must be put on notice and the RRE must report specific information as required by CMS.

 
What must be reported?

Some of the information announced by CMS is mandatory, while some is optional; however, the reporting will be electronically submitted to CMS’ Coordination of Benefits Contractor (COBC) on a quarterly basis. Examples of mandatory information include: claimant’s name, date of birth, address, social security number or health identification number, insurance information such as type of insurance and policy and claim numbers, policy holder information, date of injury, and claim resolution information. Thus, any payment made on behalf of an eligible Medicare beneficiary, including a settlement or payment to a medical facility, will be included on the quarterly report.

What are the penalties for noncompliance of the mandatory notice and reporting requirements?

Entities failing to comply with the mandatory notice and reporting requirements are subject to a $1,000 penalty per day per claim. Additionally, the new rules provide Medicare with a direct cause of action to recover payments from any entity that has received a primary payment, including a beneficiary, provider, supplier, physician, attorney, a state agency, or private insurer.

When can insurers of primary plans begin enrolling for the electronic notice and reporting requirements?

Responsible reporting entities for workers’ compensation insurance, liability insurance (including self-insurance), and no-fault insurance plans may begin registering on the COBC web site on May 1, 2009, but they must be registered no later than June 30, 2009.

Conclusion:
Primary payers should currently be revising their claims system to (1) identify claimants who are potential Medicare beneficiaries; (2) confirm Medicare entitlement of claimants; (3) notify Medicare of claims of Medicare beneficiaries; (4) determine if conditional payments have been made by Medicare; and (5) determine if reimbursements are owed to Medicare.

Employers with questions regarding the new mandatory Medicare notice and reporting requirements should contact Scott Zuerker (Fort Smith); David Dixon (Northwest Arkansas), or Jimmy Cline (Little Rock).

CHIPRA’s Impact on Employers and Group Health Plans

 

 

 

The Children’s Health Insurance Program Reauthorization Act (CHIPRA) of 2009, passed into law on February 4, 2008, authorizes States to develop premium assistance programs that help keep low-income employees enrolled in employer-sponsored health plans. Under this new legislation, group health plans must offer special enrollment rights to individuals who lose eligibility for Medicaid or State child health plan coverage, like CHIP, or who become eligible for premium assistance for such coverage. In either case, the employee has the burden of requesting special enrollment within 60 days of the loss of Medicaid/CHIP or of the eligibility determination. While under the previous law individuals had 30 days for special enrollment period, under this provision, individuals who lose or gain Medicaid or CHIP have a 60-day enrollment period. Moreover, group health plan must provide a notice of special enrollment rights at or before the time an individual is initially offered the opportunity to enroll in a group health plan. As a result, the new special enrollment right will need to be added to existing notices and summary plan descriptions (SPDs).

This new law also contains special provisions that may have a specific impact on group health plans that provide benefits to low-income populations; that is, group health plans that provide benefits to beneficiaries with incomes up to 300% of the Federal Poverty Level, or $66,150/year for a family of four. However, because these new provisions depend on State action, they will not be effective until the relevant State programs are implemented. These items, while not effective, should remain on your radar.

What should plan sponsors do? With respect to the April 1, 2009 deadline, plan sponsors need to act quickly to amend plan documents, SPDs, and enrollment materials to provide for the new special enrollment periods. Thereafter, as States begin to develop premium assistance programs, plan sponsors that provide benefits to a significant number of low-income populations should be prepared to look carefully at the public programs available to these individuals and consider how state health plans can be coordinated with group health plans.

If you have further questions about this article, please contact Amber Bagley.

The Supreme Court Expands Title VII’s
Anti-Retaliation Protection

On January 26, 2009, the United States Supreme Court expanded the scope of the protection of Title VII of the Civil Rights Act of 1964 (“Title VII”). Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, 129 S.Ct. 846 (January 26, 2009). In Crawford, the Supreme Court held that Title VII’s anti-retaliation provision protects employees who merely disclose unlawful conduct while being interviewed during an employer’s internal investigation of sexually inappropriate behavior of another employee.

In Crawford, the plaintiff claimed that she had been terminated for disclosing inappropriate conduct of a supervisor during an internal investigation. The internal investigation was instigated based on workplace rumors of a supervisor’s sexually inappropriate conduct. Prior to the internal investigation, the plaintiff had never initiated any complaints of sexual harassment.

The Crawford holding, put simply, means that an employee need not initiate an internal complaint or file a charge of unlawful conduct to be protected under Title VII’s anti-retaliation provision; merely responding to questions about unlawful conduct may be protected activity.

Crawford, undoubtedly, complicates an employer’s investigation of unlawful conduct by creating additional litigation risk from employees, who otherwise, prior to the investigation, had no basis for such claims. Crawford, unfortunately, raises more questions than it answers. Employers should be on alert when conducting an internal investigation. Please feel free to contact Cross, Gunter, Witherspoon & Galchus, P.C. for further advice on conducting an effective internal investigation or employment litigation avoidance.

Card-Check Update

 

 

 

 

Democratic Party leaders introduced the Employee Free Choice Act (“EFCA”) in both houses of Congress on March 10, 2009, as expected. EFCA, often referred to as the “card-check” bill, would drastically change how labor unions organize and how employers deal with union representation. Observers believe that EFCA will be the most hotly contested legislation on Capitol Hill this year. EFCA, a top legislative priority for organized labor, would amend the National Labor Relations Act to allow workers to organize a union in their workplace through a card check process, effectively eliminating the current secret-ballot election process. Unions would be certified automatically by the National Labor Relations Board if they present union authorization cards signed by a majority of an employer’s workers.

Supporters of EFCA, such as labor unions and worker advocacy groups, claim that the proposal will strengthen the rights of workers and improve a union representation process that they say has long been tilted toward employers. “The current crisis has shown us the dangers of an economy that leaves working families behind,” said Sen. Edward Kennedy, D-Mass., chair of the Senate Health, Education, Labor and Pensions Committee and a key Senate sponsor of EFCA. “The people who work in our factories, build our roads and care for our children are the backbone of this great nation. The Employee Free Choice Act will give these hardworking men and women a greater voice in the decisions that affect their families and their futures.”

President Barack Obama, who pledged his support of the bill to labor leaders during the 2008 election campaign, has urged Congress to pass EFCA and has stated that he would sign the bill if it reaches his desk.

Opponents of the bill claim that the legislation would take away fundamental democratic rights for workers by replacing secret-ballot elections to decide union representation with a public card check process. “The right to a secret ballot is a cornerstone of our American democracy, and it is equally vital to protect privacy in the workplace,” said House Minority Leader John Boehner, R-Ohio, in a written statement. “No one should have the right to pressure workers into making their personal views on unionization known to their co-workers, their employers and union officials.”

EFCA would also dramatically change the collective bargaining process by requiring arbitration for first contract negotiations. Whenever a union is certified by a card check process, the law would require mediation and binding arbitration between the union and employer if a voluntary agreement for a union contract cannot be reached after merely ninety (90) days of negotiations. The proposal would, in essence, allow government arbitrators, with no stake in the outcome, to set wages, benefits and working conditions binding on the employer for two (2) years. Neither employers nor employees would have the opportunity to reject or ratify the decision of the arbitrator.

Republican leaders in Congress, in a pre-emptive strike against EFCA, introduced the Secret Ballot Protection Act on Feb. 25, 2009. The Secret Ballot Protection Act would make secret ballot elections the exclusive mechanism for union certification. Under current law, employers have the option to voluntarily recognize a union through a card-check process, or seek an election monitored by the National Labor Relations Board.

In anticipation of the introduction of EFCA, several business and employer groups, led by the U.S. Chamber of Commerce, launched grassroots efforts to express opposition to the bill. Members of the Society for Human Resource Management have sent more than 20,000 letters asking members of Congress to oppose the bill. Other business groups, like the Associated Builders and Contractors and the National Association of Manufacturers, have urged their members to contact members of Congress and voice their disapproval of the legislation.

The bill passed the House of Representatives in 2007 but failed to garner enough support in the Senate for a final vote. Democrats have worked hard to gather support for the bill so that the latest version of EFCA does not suffer the same fate in the new Senate. Political observers have been speculating whether Senate Democrats had enough votes to block a GOP-led filibuster.

 

Both sides are claiming that they have enough support to move or block the proposal.  Arkansas Senators Blanche Lincoln and Mark Pryor, both Democrats, are likely to be at the center of attention in this debate. In 2007, Lincoln and Pryor were two (2) of only four (4) Democratic Senators who did not co-sponsor the bill, but both voted in favor of moving the legislation to the Senate floor for a final vote. Lincoln has, so far, refused to indicate whether she will support the bill this time around. Pryor, while declining to state specifics, has indicated that he would support potential compromise labor legislation.

Cross, Gunter, Witherspoon & Galchus, P.C. has developed a series of initiatives designed to prepare employers for the potential passage of EFCA. For more information about preparing for card-check union organizing, please contact Kelly Davenport at kdavenport@cgwg.com or any attorney at the firm.

 

Russell Gunter and Carolyn Witherspoon are conducting a firm seminar entitled “A New Administration and New HR Public Policy Issues” in Little Rock on April 23 and May 5. The seminar will also be taking place in the Fort Smith offices on May 7. The Fort Smith session, presented by Ben Shipley and Susan Keller Kendall,  will be followed by an open house reception from 4:30 – 6:30 at the CGWG offices at 5401 Rogers Avenue, Second Floor. If you would like to attend either session, please contact Kelly Davenport at kdavenport@cgwg.com.

Russell Gunter presented a speech to the Association of Legal Administrators on March 11 on the topic of human resources issues and legislative updates. He also discussed legislative updates for the Arkansas Compensation Association on March 19, 2009 in Rogers.  Mr. Gunter will speak on legislative issues at the Arkansas Society of Human Resources Managers State Conference on April 7, 2009 in Hot Springs, Arkansas.

Carolyn Witherspoon is participating in the Arkansas Water Works & Water Environment Association Conference and Short School in Hot Springs on April 26-29, 2009. She will give an employment law update speech titled “Workplace Wheel of Fortune” and will also be a panelist for the human resources and public relation issues for managers discussion.

Allen Dobson and Amber Bagley have scheduled multiple seminars discussing the new COBRA legislation. The Little Rock Lunch and Learn took place on March 24 and 26. On March 31, the Fort Smith speech was delivered. The Northwest Arkansas Breakfast Bulletin is scheduled to take place on April 15, 2009 in Rogers.

Rick Roderick presented a firm Breakfast Bulletin on February 3, 2009 on the topic of union avoidance. He presented two seminars for Arkansas State University - Workforce Training Program in Searcy. On February 10, his topic was union avoidance and the Employee Free Choice Act and on March 10 his topic was discrimination laws and the EEOC. Mr. Roderick spoke to the Arkansas Bar Association’s Labor and Employment Law Conference on the Employee Free Choice Act on March 12, 2009.

 

Carolyn Witherspoon, Susan Keller Kendall and Bo Loftis authored an article for the Transportation Lawyers Association's March 2009 newsletter, The Transportation Lawyer, entitled "Retaliation: Is Your Circuit Motivated or Determinative?". 

Brian A. Vandiver wrapped up his fourth year as the attorney coach for the Little Rock Central High School Mock Trial Team. The mock trial team recently competed in the state championship round for the fourth consecutive year. Mr. Vandiver also served as the attorney coach for the UALR School of Law Moot Court Team. The moot court team competed at the 33rd Annual Robert F. Wagner Labor and Employment Competition March 11-15, 2009 in New York City where they advanced to the final 16 teams out of 46 teams from law schools around the country.

 

Amber Bagley presented a speech regarding retention and destruction policies at a Lorman Medical Records Law Seminar on March 19, 2009.

Jimmy Cline and David Dixon will be speaking at the Arkansas Self-Insureds Association Spring Fling in Hot Springs on April 9, 2009 on the topic of immigration issues.

Jess Sweere spoke at the CGWG Breakfast Bulletin on April 1 about the Employee Free Choice Act.

Bo Loftis presented a speech about preparing for card check for the West Central Society of Human Resources Managers on February 24, 2009 in Hot Springs.

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