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The US Supreme Court recently agreed to hear Sulyma v. Intel Corp. Investment Policy Committee, a case in which the Ninth Circuit ruled that ERISA’s three-year statute of limitations requires a plaintiff to actually read materials in order to start the running of ERISA’s three-year statute of limitations. ERISA § 413(2) bars actions more than three years after “the earliest date on which the plaintiff had actual knowledge of the breach or violation,” and the Ninth Circuit held that a plaintiff who receives all the relevant information relating to her claim, but does not read it or does not recall reading it, does not have “actual knowledge” to start the limitations period. The Sixth Circuit, however, has held differently; in Brown v. Owens Corning Investment Review Committee, 622 F.3d 564, 571 (6th Cir. 2010), it held that the failure to read documents will not shield a plaintiff from having actual knowledge of the documents’ contents. Several district courts have held similarly, determining that the three-year limitations period begins when the plaintiff receives the relevant information, whether she reads it or not.

The Supreme Court decision likely will establish a uniform interpretation of ERISA’s “actual knowledge” standard for statute-of-limitations purposes. The Ninth Circuit’s decision, correct or not, makes it difficult for defendants to prove a three-year, statute-of-limitations defense, because a plaintiff who does not read contents, or cannot recall reading materials, does not have actual knowledge of the documents’ contents. The three-year limitations period would seem to have little meaning if a plaintiff simply can testify that she did not read or did not recall reading relevant materials.

The Supreme Court’s order stated only that the petitions for writs of certiorari are granted. Intel’s opening brief is due 45 days from the grant of certiorari.

https://www.employeebenefitsblog.com/2019/06/supreme-court-agrees-to-hear-sulyma-v-intel-statute-of-limitations-decision/

Diane M. Morgenthaler and Jeffrey M. Holdvogt recently presented the webinar “Student Loan Benefits and Other 401(k) Developments” at the Worldwide Employee Benefits Network Chicagoland program. In the presentation, they discussed a variety of new 401(k) trends and developments, including:

  • Employer options for student loan benefits and related considerations;
  • The IRS’s recent expansion of its determination letter program to certain hybrid and merged plans; and
  • New changes to EPCRS, the IRS’s comprehensive program for correcting tax-qualified plan failures.

For more information on these and other developments, please see our On the Subjects on the SECURE Act and the changes to EPCRS.

View the full presentation. 

https://www.employeebenefitsblog.com/2019/06/hot-off-the-presses-latest-401k-trends-developments/

DOJ’s focus on individual accountability is particularly important with respect to telemedicine. Telemedicine is a burgeoning field, with a projected market increase of 18% annually over the next six years, reaching $103 billion in 2024. In light of this recent surge in profitability, DOJ has begun paying extra attention to telemedicine, with at least one recent HHS-OIG report asserting that more than one-third of all telemedicine claims are improper.

Continue reading.

https://www.employeebenefitsblog.com/2019/06/dojs-enforcement-activity-against-individuals-acute-focus-on-telemedicine/

On Monday, the US Supreme Court agreed to review the Second Circuit’s decision in Jander v. Retirement Plans Committee of IBM, a “stock drop” lawsuit against IBM’s benefit plan fiduciaries. The Second Circuit’s decision marked one of the few times a federal court permitted a “stock drop” lawsuit to survive dismissal since the Supreme Court’s decisions in Fifth Third Bank v. Dudenhoeffer (2012) and Harris v. Amgen (2016).

Together, the Dudenhoeffer and Amgen decisions set a high pleading bar for plaintiffs who file “stock drop” claims. These lawsuits involve employee stock ownership plans, in which the plan includes employer stock as an investment option, and a subsequent drop in that stock’s price. Plaintiffs allege that by failing to remove the stock from the plan or take other corrective action (such as disclosing information), fiduciaries breached the prudent person standard of care that ERISA imposes on fiduciaries. Dudenhoeffer requires plaintiffs to allege that a prudent fiduciary in the same position could not have concluded that the corrective, alternative action would do more harm than good.

In the Jander lawsuit, the plaintiffs had alleged IBM fiduciaries knew IBM’s market price was artificially inflated due to the undisclosed impairment of one of IBM’s units, which IBM eventually sold. Plaintiffs alleged that when the IBM fiduciaries learned the stock price was artificially inflated, they should have either made corrective disclosures to plan participants about the unit’s “true value” or frozen investments in IBM stock. Plaintiffs emphasized that IBM would eventually be required to disclose the alleged fraud publicly due to the unit’s sale, and cited studies that fraud is more harmful the longer it is left undisclosed. The Second Circuit found these allegations to be “particularly important,” reasoning that “when a drop in the value of the stock already held by the fund is inevitable, it is far more plausible” that failure to disclose would do more harm than good, and that no prudent fiduciary would fail to promptly disclose.

As the IBM fiduciaries observed in their petition for a writ of certiorari with the Supreme Court, the Second Circuit’s decision arguably created a split with the Fifth and Sixth Circuits, which had both previously found generic allegations that disclosure was inevitable and that fraud is more harmful the longer is it undisclosed implausible under Dudenhoeffer. The Supreme Court’s decision to grant the petition and hear the case could result in further clarity about the pleading standards for breach of ERISA duty of prudence claims involving ESOPs.

https://www.employeebenefitsblog.com/2019/06/us-supreme-court-to-review-unusual-second-circuit-decision-in-stock-drop-case-against-ibm/

Those were the days: when family-owned businesses paid only passing attention to the business value of providing tax-efficient—and incentivizing—benefit plans and compensation options. Tomorrow, Employee Benefits partner Todd Solomon and Private Client partner Bobbi Bierhals join host Judith Wethall during our Fridays with Benefits webinar series to discuss benefit plans and compensation strategies for modern family-owned companies and family offices.

Join our lively 45-minute discussion, where we’ll discuss the following points:

  • Benefit plan options and unique challenges for family-owned companies and family offices
  • The latest compensation strategies to incentivize employees
  • Options for providing value without a direct ownership stake in the family-owned company

Friday, June 7, 2019

10:00 – 10:45 am PST
11:00 – 11:45 am MST
12:00 – 12:45 pm CST
1:00 – 1:45 pm EST

Register Now.

https://www.employeebenefitsblog.com/2019/06/fridays-with-benefits-webinar-all-in-the-family-21st-century-benefit-plan-strategies-for-family-owned-businesses/

The House recently passed the most significant piece of proposed retirement plan legislation in more than a decade: the SECURE Act. Although the Senate must also approve the bill before it becomes law, its proposed changes have considerable bipartisan support in Congress. Plan sponsors should start considering how changes included in the SECURE Act could impact their retirement plans. Employers who do not currently offer retirement plans should also review the new retirement plan incentives included in the proposed legislation.

Access the full article.

https://www.employeebenefitsblog.com/2019/06/bipartisan-bill-paves-the-way-for-significant-retirement-plan-reforms/

The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the applicable dollar limits for health savings accounts and high-deductible health plans for 2020. Nearly all of the dollar limits currently in effect for 2019 will change for 2020.

See a comparison of the applicable dollar limits for HSAs and HDHPs for 2019 and 2020.

Access the full article.

https://www.employeebenefitsblog.com/2019/05/irs-announces-2020-limits-for-health-savings-accounts-and-high-deductible-health-plans/

On Friday, March 24, 2019, the US Department of Health and Human Services issued a proposed rule (along with a related fact sheet) under Section 1557 of the Affordable Care Act (ACA) that would make significant changes to the final regulations issued in 2016. Section 1557, in effect since the ACA was enacted in 2010, provides that an individual shall not—on the grounds prohibited under Title VII of the Civil Rights Act of 1964 (race, color, national origin), Title IX of the Education Amendments of 1972 (sex), the Age Discrimination Act of 1975 (age) or Section 504 of the Rehabilitation Act of 1973 (disability)—be excluded from participation in, be denied the benefits of or be subjected to discrimination under any health program or activity, any part of which is receiving federal financial assistance, or under any program or activity that is administered by an agency established under Title I of the ACA.

The proposed rule addresses a broad range of changes to the previously issued rule. These changes would include eliminating the non-discrimination notices and “tagline” translation notices in significant communications and revising prior guidance on sex discrimination to no longer include gender identity and termination of pregnancy, among other changes. Interested parties are invited to submit comments on the proposed rule through the period ending 60 days after publication in the Federal Register.

https://www.employeebenefitsblog.com/2019/05/hhs-proposes-changes-to-2016-regulations-for-aca-non-discrimination-rule/

The IRS recently released an updated version of EPCRS, the IRS’s program for correcting errors that occur under tax-qualified retirement plans. The latest version of EPCRS makes it easier for plan sponsors to self-correct certain types of plan loan, operational and plan document failures without filing a VCP submission.

Access the full article.

https://www.employeebenefitsblog.com/2019/05/irs-expands-self-correction-program-provides-welcome-relief-for-plan-sponsors/

A recent summary-judgment decision explains how individual releases can bar the individual from pursuing ERISA fiduciary-breach claims on behalf of the plan. A plan, employer or fiduciary that wants to ensure a release that includes ERISA claims on behalf of a plan should consider language that addresses the court’s areas of inquiry in the case, which are outlined in this article.

Access the full article.

https://www.employeebenefitsblog.com/2019/05/former-employees-release-agreement-bars-erisa-claim-against-esop-fiduciary/