Compliance September 16, 2005

Judge Clears Chase of Fiduciary Breach Charges

September 16, 2005 (PLANSPONSOR.com) - A federal judge has cleared officials at Chase Manhattan Mortgage Corporation of fiduciary breach charges in connection with a lawsuit by an employee who claims the firm mishandled its long-term disability (LTD) program.
Reported by

US District Judge R. Barclay Surrick of the US District Court for the Eastern District of Pennsylvania ruled in favor of Chase Manhattan after a two-day trial before the court in August.

Plaintiff Joseph Hussey alleged that the company breached its fiduciary duty under the Employee Retirement Income Security Act (ERISA) by “fail[ing] to convey complete and accurate information regarding the benefits for which he was eligible” and the “steps to be taken to enroll in those benefits.” Specifically, Hussey alleged that defendants breached their fiduciary duties by misrepresenting and/or omitting important information about his eligibility for the company’s LTD excess plan.

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Following a trial Surrick ruled:

  • that there was insufficient evidence of any fiduciary misrepresentation regarding his eligibility for supplemental coverage
  • that the information provided by the employer more than adequately explained the supplemental coverage and its enrollment procedures
  • that the delivery methods used to provide information to the employee (hand-delivery, inter-office mail, and e-mail) were “more than sufficient to ensure that [the employee] received the relevant plan materials” regarding his eligibility for the supplemental coverage.

Last month, Hussey won the right to present evidence that the company’s human resources department was “disorganized or dysfunctional”  (See  Ex-Chase Worker Wins Legal Round in LTD Dispute). Surrick’s latest ruling is  here .

Compliance September 15, 2005

Senate Bill Helps With Katrina Victim Health Coverage

September 15, 2005 (PLANSPONSOR.com) - The federal government would subsidize group health insurance premiums of plans sponsored by employers in areas affected by Hurricane Katrina under a measure unveiled Wednesday by two US senators.
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The measure, proposed by Finance Committee Chairman Senator Charles Grassley, (R-Iowa), and ranking minority member Senator Max Baucus, (D-Montana), calls for the creation of a new, federally funded Hurricane Katrina health care relief measure, according to Business Insurance.

The package allocates federal relief funds to be used to pay for health insurance premiums of those covered in group health plans that were established before Hurricane Katrina. This assistance would continue for several months.

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Additionally, the proposal said technical changes in the law would be made to protect individuals eligible for COBRA health care continuation coverage. While experts say they are awaiting more detail, they say the provision could be intended to ensure that beneficiaries in Katrina-affected areas don’t lose their right to COBRA if they didn’t elect coverage or pay premiums on time.

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