Compliance August 24, 2006

Corzine Signs NJ Employer Health Insurance Reporting Measure

August 24, 2006 (PLANSPONSOR.com) - New Jersey state health officials will now release an annual report listing Garden State employers with at least 50 workers and/or dependents on state-sponsored health programs as provided for under a new bill.
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Governor Jon Corzine signed into law S. 539, which provides for the annual report to be issued September 1 starting this year by the state’s Department of Health and Senior Services, Business Insurance reported.

The workers and dependents covered by the new law are those either in the state Medicaid program or in FamilyCare, a state program for low-income families who lack employer insurance, according to the news report.

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While the New Jersey State AFL-CIO supported the measure, the National Federation of Independent Businesses (NFIB) and the New Jersey Business & Industry Association opposed it. The NFIB warned that it could lead to mandated health insurance. The New Jersey business group described the bill as “nothing more than an effort to harass businesses at a time when most are already struggling to keep up with skyrocketing health insurance costs.”

Colorado Governor Bill Owens in June vetoed a similar proposal (See CO Governor Vetoes Two Health Care Bills ), calling the bill “well intentioned.”

“Not only does this bill threaten existingColorado jobs by pressuring employers into potentially unaffordable expenditures, SB 227 also would put Colorado at a competitive disadvantage in terms of job creation,” Owens wrote in his veto message. “Companies would be hesitant to bring family sustaining jobs to Colorado if they knew the state was injecting itself so directly and publicly into their business decisions.”

Compliance August 23, 2006

Lockheed Cleared of Fiduciary Misstep in Rollover Dispute

August 23, 2006 (PLANSPONSOR.com) - A federal appellate court has cleared Lockheed Martin Energy Systems Inc. (LMES) of wrongdoing in connection with whether IT employees could roll their 401(k) balances to the plan sponsored by the company to which they were outsourced.
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In upholding a lower court ruling, the 6 th US Circuit Court of Appeals threw out the fiduciary breach suit against LMES filed by technology employees who were outsourced to Science Applications International Corp. (SAIC).

The appellate ruling, written by Circuit Judge Deborah Cook, asserted that there was no breach of the Employee Retirement Income Security Act (ERISA) when SAIC realized the proposed LMES rollovers would be barred by an Internal Revenue Service (IRS) rule. LMES then asked about doing “trust to trust” transfers, but SAIC refused, the opinion indicated.

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Both Cook and the lower court judge in Tennessee ruled that the sequence of events did not trigger ERISA’s fiduciary requirements. The participants’ suit alleged they were mislead about the rollover potential.

Cook ruled that ERISA permitted LMES to wear “two hats,” one as a plan fiduciary and the other as an employer. The appeals court rejected the employees’ contention that LMES’s fiduciary duties were triggered when, during the process of implementing its business decision to outsource the IT division, it misled the employees about their ability to rollover their 401(k) balances.

The decision in Adams v. Lockheed Martin Energy Systems Inc., 6th Cir., No. 04-6204, unpublished 8/21/06, is here .

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