Source: https://www.hodgsonruss.com/newsroom-publications-EmployeeBenefitsDevelopmentsJuly2011.html
Timestamp: 2019-04-22 05:30:10+00:00

Document:
Plan fiduciaries should be aware that communications with benefit plan attorneys may not be privileged. The Department of Labor (DOL) recently investigated the management of two multiemployer funds in connection with a $10.1 million loss of Employee Retirement Income Security Act of 1974 (ERISA) plan assets resulting from investments in entities related to Bernard Madoff. In 2009, the DOL issued two subpoenas requesting documents relating to the administration of the funds. The administrators of the funds provided documents partially responsive to the subpoenas but redacted portions of some documents and wholly withheld other portions, claiming they were protected by attorney-client and work product privileges. The DOL filed a petition in federal district court to obtain compliance with the subpoenas. Upon briefing and a hearing, the district court granted the DOL’s petition. On appeal, the Fourth Circuit Court of Appeals affirmed the district court’s order granting the DOL’s petition to enforce the subpoenas. In affirming the district court’s decision, the Fourth Circuit joined four other circuit courts, including the Second Circuit of New York, in concluding that the fiduciary exception to the attorney client privilege applied under ERISA.
The DOL has published final regulations modifying the applicability dates for certain fee disclosure rules. In July 2010, interim final regulations under the ERISA § 408(b)(2) were issued, requiring covered service providers of retirement plans to disclose comprehensive fee information and possible conflict of interest information to ERISA fiduciaries. The original applicability date was for contracts or arrangements in existence on or after July 16, 2010. The new applicability date for ERISA § 408(b)(2) fee disclosure has been set as April 1, 2012.
In October 2010, the DOL also published a final regulation regarding employer disclosure to participants of plan and investment costs for self-directed 401(k) and other individual account plans under ERISA § 404(c). Under the revised applicability date, the ERISA § 404(c) participant disclosure will be effective 60 days following the applicability date of the ERISA § 408(b)(2) fee disclosure regulation. The change was made so that the ERISA § 408(b)(2) disclosure regulation will be in force before plans are required to disclose fees to participants.
Expedited Notification for Urgent Care Benefit Determinations. Previously, the interim final regulations required a plan to notify a claimant of benefit determinations involving urgent care as soon as possible, but no later than 24 hours after receipt of the claim. Under the new amended regulations, so long as the plan defers to the attending provider over whether the claim involves a matter of urgent care, the urgent care determination can be made as soon as possible, but not later than 72 hours. This extension is consistent with the urgent claim review process required by ERISA.
Additional Notice Requirements for Internal Claims and Appeals. The July 2010 regulations required a plan to include treatment and diagnostic codes, and the meaning of those codes, in any notice of adverse benefit determination. Under the amended regulations, plans are no longer required to automatically provide diagnosis and treatment codes. Instead, the adverse benefit determination must notify the claimant of his or her opportunity to request the codes and their meanings. The amendment also clarifies that a plan must not consider a request for diagnosis or treatment information as a request for an internal appeal or external review.
Also, the claimant is entitled upon written request to an explanation of the plan’s basis for asserting that it meets the exception.
Form and Manner of Notice. PPACA requires group health plans to provide relevant notices in a culturally and linguistically appropriate manner. The July 2010 regulations required that notices be provided in a non-English language based on separate thresholds depening on the number of plan participants who are literate in the same non-English language. The amended regulations establish a single threshold for people literate only in the same non-English language: 10 percent or more of the population residing in the claimant’s county, as determined by American Community Survey data published by the United States Census Bureau.
Scope of the Federal External Review Process. Under the July 2010 regulations, claims eligible for external review included any adverse benefit determination unless it related to a participant’s or beneficiary’s failure to meet the requirements for eligibility under the terms of the group health plan. The new amendment restricts the broad scope of claims eligible for the federal external review process and to claims that involve medical judgment, as determined by an external reviewer, or a rescission of coverage.
Clarification Regarding Requirement That External Review Decisions Be Binding. The July 2010 regulations provided that an external review decision by an Independent Review Organization (IRO) is binding on the plan as well as the claimant, except to the extent that other remedies are available under state or federal law. The new amendment adds language to the final regulations stating that the plan must provide benefits pursuant to the final external review decision without delay, regardless of whether the plan intends to seek judicial review and unless or until there is a judicial decision otherwise.
The effective date of the amendments to the claims and appeals procedures affecting non-grandfathered plans is July 22, 2011.
The amended regulations and revised model notices for adverse benefit determinations are available at www.dol.gov/ebsa/healthreform.

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