OPM Says It Won't Follow Orders on Same-Sex Benefits

December 22, 2009 (PLANSPONSOR.com) – The federal Office of Personnel Management says it won't follow a federal court's orders to provide health benefits for same-sex spouses of the court's employees.

The Washington Post reports that the agency told a lawyer for one of the employees that it would not obey the order because it is in violation of the federal Defense of Marriage Act. “OPM must administer the FEHBP [Federal Employees Health Benefits Program] in a lawful manner, and the Department of Justice (DOJ) has advised the OPM that providing those benefits would violate the so-called ‘Defense of Marriage Act,’ ” OPM General Counsel Elaine Kaplan said in a statement, according to the newspaper.

In addition, administration officials say they are within their rights to ignore the judge’s order in the employee’s case because, they reason, he issued it in his capacity as the court’s boss, not in his role as a judge. The judge’s decision was not issued as a formal court order because the employee’s complaint went through the court’s administrative Employee Dispute Resolution Plan, rather than a judicial process, the Post explained.

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Last month, Judges Alex Kozinski and Stephen Reinhardt of the 9th U.S. Circuit Court of Appeals issued strongly worded orders directing OPM to grant benefits to same-sex spouses in two separate cases (see 9th Circuit Jurists in Standoff with Fed Agency). Kozinski’s order shows he doesn’t agree with the agency’s interpretation of DOMA. “Even as limited by DOMA,” the judge wrote, “the FEHBP permits judicial employees to provide health insurance coverage to their same-sex spouses.”

The statement by Kaplan indicated that OPM sympathizes with the employees’ situations, but feels obligated to follow its interpretation of the law. “As the President has explained, the Administration believes that this law is discriminatory and needs to be repealed by Congress — that is why President Obama has stated that he opposes DOMA and supports its legislative repeal,” Kaplan said.

OppenheimerFunds Settles Illinois 529 Program Investigation

December 22, 2009 (PLANSPONSOR.com) - OppenheimerFunds, Inc. and the state of Illinois have reached an agreement to resolve the state's investigation into the management of its Bright Start College Savings Program.

Under the terms of the settlement agreement, OppenheimerFunds does not admit any wrongdoing and agrees to pay the State $77 million which the state intends to distribute to eligible participants in the Bright Start program. A press release said the settlement allows both the state and OppenheimerFunds to avoid a potentially lengthy and expensive legal process.

OFI Private Investments Inc., an OppenheimerFunds subsidiary, remains the program manager for the Bright Start program.

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OppenheimerFunds recently settled a lawsuit brought by the state of Oregon over losses to the state’s 529 plan assets invested in the investment firm’s Core Bond Fund (see Oregon Settles with Oppenheimer on 529 Plan Losses).

Other shareholder suits have been brought against the firm in New York (see OppenheimerFunds Faces More Litigation over Champion Income Fund) and California (see OppenheimerFunds Hit with Bond Fund Lawsuit) claiming its fixed income funds were too risky.

In January, OppenheimerFunds announced the appointment of a new Director of Fixed Income (see Oppenheimer Names New Head of Fixed Income), and prior to that installed new leadership for the Core Bond Fund’s management team.

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