Compliance May 12, 2005

Court Refuses Dismissal of COBRA Suit

May 12, 2005 (PLANSPONSOR.com) - A federal judge has refused to throw out a fuel delivery driver's lawsuit under the Consolidated Omnibus Budget Reconciliation Act (COBRA), because it was not clear whether the case qualified for the law's "gross misconduct" exemption.
Reported by

>US District Judge John Tunheim of the US District Court for the District of Minnesota said there were still questions about whether the actions of plaintiff Lloyd Rengo, a driver for Lakehead Oil Co., qualified for an exemption to COBRA’s requirements that departing workers be allowed to continue their health coverage. COBRA covers workers who lose their medical insurance “as a result of a qualifying event.” Being fired for reasons other than “gross misconduct” represents such an event, according to Tunheim.

>After being fired, Rengo sued Lakehead over his allegations of COBRA violations, saying that he never received the required notices and paperwork to allow him to continue his coverage under Lakehead’s plan despite several requests. The company contended that it had mailed the forms with Rengo’s final paycheck and, after not receiving a response, cut off Rengo’s coverage.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

>According to Tunheim’s ruling, Rengo’s dispute with his former employer centers around the events of October 6, 2001 when, according to the court, Rengo delayed delivering fuel to a gas station for about 45 minutes to deal with a plumbing emergency at his home. The station ran out of fuel and lost the business of a half dozen customers who had attempted unsuccessfully to fill up during the intervening period, Tunheim said.

“Whether Rengo knew the station was actually out of fuel, whether Rengo was directed to proceed immediately to the station or directed to get to the station as soon as possible, and the extent of damage that Lakehead suffered as a result of Rengo’s actions are all questions of fact that remain in dispute,” Tunheim wrote. “These facts are directed related to whether Rengo’s decision to delay delivery of his load constitutes gross misconduct. Therefore, the Court cannot determine as a matter of law, that Rengo was terminated for gross misconduct, thereby eliminated Lakehead’s obligation to offer continuation benefits.”

>The full text of the opinion in Rengo v. Lakehead Oil Co., D. Minn., No. 03-5478 (JRT/RLE), 4/19/05 can be found  here .

Benefits May 11, 2005

Early Communication, Active Enrollment Important for HSA Success

May 11 2005 (PLANSPONSOR.com) - Employers instituting Health Savings Accounts (HSAs) should make sweeping changes to all health plan designs, require an active benefits enrollment, communicate plan adjustments early and provide education support and cost calculators.
Reported by

That advice was contained in a new Fidelity Investment research report based on the experience with clients since HSAs became available last year.

Get more!  Sign up for PLANSPONSOR newsletters.

Fidelity’s clients were able to share key lessons they had learned about implementing HSAs as part of their benefits strategy, according to a Fidelity news release:

  • early adopter employers who saw the strongest HSA enrollment rates – up to half of their employee base in some cases – made design changes to their health care plans beyond simply adding an HSA option. This required employees to make a conscious decision about their health care plan during annual enrollment.
  • early adopters who communicated new health plan changes early, and in each stage of implementation, were most successful in terms of HSA enrollment among employees.
  • clients said they saw a stronger need for education support including cost calculators when it comes to health care benefits choices.

In addition, Fidelity said its health care consultants gathered additional insights from employers who were quick to jump on the HSA bandwagon.

  • Employers should clearly understand the role that HSAs will play in their overall benefits strategy.
  • Early Adopters found it critical to gain the support of not only senior management, but also line managers.
  • When introducing a new benefit plan option, such as an HSA, it is important that employers show their workforce they are serious about making these changes by providing some level of employer contribution.
  • It is critical that employers understand how new plan designs could affect different groups of employees in their population in terms of health benefits costs and consumption.
  • Early Adopter employers stressed that the “devil is in the details” when it comes to account implementation and administration.

«