New Bill Would Void Mandatory Arbitration in ERISA-Governed Plans
The Mental Health Matters Act moves to the Senate after House passage, and would eliminate forced arbitration clauses, class action waivers, discretionary clauses, and representation waivers in ERISA-governed plans.
The Mental Health Matters Act passed the House in late September by a vote of 220 to 205.
The bill, which was initially proposed in the House in May, would amend the Employee Retirement Income Security Act to make mandatory arbitration clauses unenforceable. This means that benefits plans would be banned from requiring predispute arbitration as a condition of joining the plan. The bill would also eliminate discretionary authority for plan administrators in providing benefits.
Title VII of the bill renders forced arbitration clauses, class action waivers, discretionary clauses, and representation waivers unenforceable for the purposes of benefits governed by ERISA. Beneficiaries may still consent to arbitration after a dispute arises however, as long as the following conditions apply: the participant was not coerced into agreeing to arbitration, the participant must be informed in writing of their right to refuse to agree without retaliation, and they must have a 45-day waiting period to agree to arbitration.
Plans would have one year to comply with the regulations.
Other sections of the bill would increase funding for mental and behavioral health care in schools.
Lastly, the bill would empower the Department of Labor to bring more civil actions to enforce the Mental Health Parity and Addiction Equity Act which requires insurers to provide the same mental and behavioral health benefits that they provide for medical and surgical claims. Specifically, the bill would authorize $240 million to the Employee Benefit Security Administration and $35 million to the DOL’s Solicitor General’s office over 10 years for this purpose.
Support and Opposition
The Biden Administration has come out in public support of the bill, suggesting that President Biden would sign it if it passes the Senate.
“H.R. 7780 will strengthen the provision of affordable mental and other health care by authorizing critical tools and resources for the Secretary of Labor to enforce provisions of the Employee Retirement Income Security Act, including those added by the Mental Health Parity and Addiction Equity Act of 2008. And it will help prevent Americans from being improperly denied mental health and substance use benefits by ensuring a fair standard of review by the courts and banning so-called forced arbitration agreements. The Administration urges the House to pass the Mental Health Matters Act of 2022.”
The American Hospital Association also supports the bill on the grounds that forced arbitration agreements limits access to a “fair standard of review by the courts.”
The Morgan Lewis law firm cautioned that this would encourage more costly litigation and frivolous suits, since many weaker cases are filtered out by the more expedited arbitration process.
The US Chamber of Commerce has also voiced opposition to the bill. It likewise notes that it will encourage more litigation and that employees tend to be more successful in arbitration than in court proceedings in both case victory and award size, though beneficiaries would have the option to seek arbitration. Rep. Matt Gaetz (R-FL) also noted that data showing higher plaintiff success rates in arbitration likely does not account for private settlements that arise as a result of bringing a formal lawsuit.
Similar Legislation
There are some precedents for this legislation in both state and federal law. For example, California already bans discretionary clauses for long-term disability insurance.
Consumer Reports has also come out in support of similar legislation in other contexts. It notes that forced arbitration clauses place ordinary consumers at a disadvantage, and support the Forced Arbitration Injustice Repeal Act, introduced in the Senate in March 2021, which would ban mandatory arbitration in an employment, consumer, anti-trust or civil rights dispute.
While the Mental Health Matters Act passed the House Sept. 29, it does not appear to have been debated yet in the Senate.
The text of the Mental Health Matters Act is available here.
Lockton launches new people solutions practice; Groom Law Group expands health practice with new principal; Multnomah Group acquires Pacific Retirement Partners; and more.
Lockton Companies, an independent insurance brokerage and consulting group, has announced its employee benefits practice has become Lockton People Solutions.
Lockton’s People Solutions practice seeks to helps organizations become more successful by delivering a suite of solutions to meet the needs of companies operating in today’s environment.
Lockton’s People Solutions practice consists of solutions supporting clients in the areas of employee experiences and engagement, total rewards and benefits, and measurement and management of their programs.
Guidehouse Completes Acquisition of Grant Thornton’s Public Sector Advisory Practice
Guidehouse, a portfolio company of Veritas Capital and global provider of consulting services to the public and commercial sectors, has announced the completion of its acquisition of Grant Thornton’s Public Sector Advisory practice.
The acquisition seeks to bolster Guidehouse’s consulting expertise across financial services, energy, health, national security and defense, while deepening its capabilities with solutions in areas that include finance, human-capital management, information technology, data analytics and performance management.
The transaction was announced August 22. Baird served as exclusive financial adviser to Guidehouse and Veritas Capital, and Milbank LLP and Covington & Burling LLP served as legal counsel. Deutsche Bank Securities served as exclusive financial adviser to Grant Thornton, and Morrison & Foerster LLP and Akerman LLP served as legal counsel.
Groom Law Group Expands Health Practice with New Principal
Groom Law Group, Chartered has announced that Xavier Baker has joined the firm as a principal in the health services practice group. Baker brings to Groom expertise as a seasoned health industry regulatory lawyer and most recently was a principal at a large national law firm.
Baker’s practice runs the gamut of federal and state laws regulating insurers and managed care companies. He supports health plans with strategic counseling, product design and compliance, government investigations, and as a subject matter expert on health controversy matters. Some areas of specific focus include mental health parity, the Affordable Care Act, Medicare Advantage, Medicaid managed care, and commercial health insurance regulation.
Multnomah Group Acquires Pacific Retirement Partners
Multnomah Group and Pacific Retirement Partners have announced the merger of Pacific Retirement Partners into Multnomah Group. This combination brings the Pacific Retirement Partners team to Multnomah Group to continue to serve clients while allowing Multnomah Group to extend its consulting services into the emerging employer market.
As part of the merger, Joe Fleishman and Charles Warren will become equity-owning principals in Multnomah Group.
Raymond James Investment Management Completes Rebrand
Raymond James Investment Management, an asset management company and wholly owned subsidiary of Raymond James, has announced that its new brand identity is now effective. The company, formerly known as Carillon Tower Advisers, initially announced the new brand name in June.
The Raymond James Investment Management identity, which is now reflected in the company’s physical and digital brand assets, reinforces the alignment of culture and values with Raymond James, while enhancing overall brand awareness to position the company for future growth and expansion.
Raymond James Investment Management’s boutique investment managers—Chartwell Investment Partners, ClariVest Asset Management, Cougar Global Investments, Eagle Asset Management, Reams Asset Management (a division of Scout), and Scout Investments—continue to retain their individual brand identities, operations, portfolio management, and the independence of their investment teams.
Neal Gerber Eisenberg Adds to Labor and Employment Group with New Partner
Neal Gerber Eisenberg has announced the addition of Kristin Michaels as a partner in the labor and employment practice group. Most recently, Michaels served as chief legal counsel of a national media company.
Michaels advises clients on all aspects of labor and employment law with significant experience in labor relations, employment advice and counseling, and mergers and acquisitions. She has handled hundreds of matters before the National Labor Relations Board, arbitral tribunals, and employment litigation cases involving claims of harassment and discrimination, wage and hour violations, and breach of restrictive covenants.
She also represents clients in litigation related to Title VII of the Civil Rights Act through the Fair Labor Standards Act. She regularly counsels clients on internal investigations of claims of harassment and discrimination.
Michaels received her J.D. from Northwestern University Pritzker School of Law and her B.A. from Marquette University, magna cum laude. Previously, she was a partner at McDermott, Will & Emery.
International law firm Dorsey & Whitney LLP has announced that Nick Pappas has joined as a partner in the health care litigation group in New York.
Pappas joins Dorsey from Weil, Gotshal & Manges, LLP, where he was a partner for many years. His practice concentrates on the defense of class actions challenging the administration of health care benefit plans, 401(k) plans and defined benefit plans. He also focuses on the full spectrum of complex employment litigation matters, including in relation to antidiscrimination laws, restrictive covenant agreements and executive employment agreements.
Lincoln Financial Group Names Retirement Plan Services Product Senior Vice President
Lincoln Financial Group has announced that Matt Condos has been named senior vice president, retirement plan services product. Condos will report to Ralph Ferraro, president of retirement plan services, and will join the company’s corporate leadership group. In this role, Condos will be responsible for leading the strategic direction of the product solutions team for Lincoln’s Retirement Plan Services business.
Condos joined Lincoln Financial in 2017 as vice president, retirement plan services product management. During his tenure he has led several key initiatives for the business, including the rollout of a suite of in-plan guaranteed income products following the passage of the SECURE Act, the launch and expansion of Lincoln Financial’s YourPath risk-based target date portfolios and expanding Lincoln’s stable value solution. Prior to joining Lincoln, he held senior leadership positions in the Retirement business at Voya during his 12-year tenure.
Condos earned a bachelor’s in business administration from Bryant University, is a Fellow of the Society of Actuaries, and is FINRA Series 7, 26, 63, 86 and 87 registered.
Mercer Appoints U.S. Investments and Retirement Leader
Mercer, and a business of Marsh McLennan, has named Marc Cordover as U.S. investments and retirement leader. Previously Mercer’s East wealth market business leader, Cordover will also join Mercer’s global wealth and U.S. and Canada leadership teams. Cordover will have oversight of the firm’s range of investment and retirement solutions. Based in Atlanta, he will report to Pat Tomlinson, president, U.S. and Canada, effective immediately. Cordover will succeed Chris Mahoney, who was recently appointed Global defined benefits/defined contributions leader.
Cordover brings over 25 years of experience in market leadership roles and client management. Since joining Mercer in 1996 as an analyst in the retirement business, he has held a variety of leadership roles, including Houston office business leader, central market business leader, and U.S. and Canada retirement sales leader. Cordover holds a Bachelor of Science in statistics from the University of Florida and a Master of Actuarial Science from Georgia State University.
Ninety One Appoints Northeast Head of Institutional
Ninety One has announced the appointment of Gregg Abramson as head of institutional, Northeast, based in New York. Abramson will be responsible for all aspects of Ninety One’s engagements with institutional asset owners and respective consultants in the region and be a member of the North America client group’s leadership team. Abramson will work closely with the team, including Jordan Miller, Vice President, Institutional, Northeast, to serve clients and drive new opportunities.
Abramson joins Ninety One from Goldman Sachs Asset Management where he served as managing director, client solutions and capital markets. In this role, he provided customized investment solutions to several of the firm’s most sophisticated U.S. institutional clients including large pension plans, public funds, endowments and foundations. He previously was a director at Commonfund Asset Management and began his career at Lazard Asset Management. Abramson received a Bachelor of Arts in history from The University of Wisconsin – Madison and a Master of Business Administration in finance from New York University.
Voya Investment Management Appoints Firm’s First Global CIO
Voya Investment Management, the asset management business of Voya Financial, Inc., has announced that Matt Toms has been appointed to the newly created role of global chief investment officer.
Toms, who has served as CIO of fixed income for Voya Investment Management since September 2016, will now lead the firm’s more than 300 investment professionals who are managing approximately $330 billion in assets under management across fixed income, equities, multi-asset solutions and alternative strategies. He will continue to report to Christine Hurtsellers, chief executive officer, Voya IM.
The fixed income investment team will continue to report to Toms, who will maintain his current portfolio management responsibilities. In addition, Chris Lyons, will take on an expanded role as head of private fixed income and alternatives. Lyons had most recently served as group head of private credit and will continue to report to Toms.
Vincent Costa and Paul Zemsky will continue in their CIO roles overseeing equities and multi-asset solutions, respectively, and will now both report to Toms.
Prior to becoming CIO of fixed income, Toms oversaw the investment teams responsible for investment-grade corporate, high-yield corporate, securitized products, mortgage-backed securities, emerging market debt and money market strategies. Prior to joining Voya IM, Toms worked with Calamos Investments, where he established and grew its fixed income business. He also previously held roles with Northern Trust and Lincoln National.
Voya IM also announced today several future changes to its investment teams:
Michael Pytosh, who has served as co-CIO with Costa overseeing Voya IM’s equities platform and Jeffrey Bianchi, who has served as a portfolio manager on several of Voya IM’s growth equities strategies, will be leaving the firm at the end of 2022. Effective January 1, 2023, Leigh Todd, will serve as the lead portfolio manager for Voya IM’s equities growth strategies. Todd will work closely with Kristy Finnegan, who will continue to serve as a portfolio manager on the firm’s growth strategies.
Richard Johnson, who joined Voya IM in connection with the firm’s acquisition of the investment advisory business and certain other assets of small cap growth specialist Tygh Capital Management in January 2022, will retire in June 2023. Michael Coyne, who also joined Voya IM from the Tygh team earlier this year, will lead the small cap equities team upon Johnson’s retirement.
Jeff Bakalar, senior managing director, group head and CIO of Voya IM’s leveraged credit group, will retire in April 2023. Bakalar will be succeeded by Mohamed Basma, who has been named head of leveraged credit. Basma most recently served as managing director, head of senior loans and global CLOs.
