Author: Site Staff

Six health insurers that allegedly conspired with brokers to steer customers their way in return for hidden commissions did not violate the Employee Retirement Income Security Act, a New Jersey district court judge ruled January 14.

Judge Garrett E. Brown Jr.’s dismissal of the ERISA claims against American International Group Inc., Cigna Corp., Hartford Financial Services Group, MetLife Inc., Prudential Insurance Co. of America and Unum Corp. is the latest ruling in the ongoing consolidated litigation in New Jersey that stems from industrywide investigations into bid-rigging and client-steering allegations.

Brought on behalf of commercial property/casualty insurance policyholders and employee benefit plan sponsors, the litigation centers on allegations that several dozen insurers and brokers engaged in a conspiracy in which they stifled competition by steering clients and fixing prices in violation of the Racketeer Influenced and Corrupt Organizations Act, the Sherman Antitrust Act and ERISA.

In two separate rulings last year, Judge Brown threw out the RICO and antitrust claims against the insurers and brokers, citing lack of factual evidence.

Those rulings are now on appeal in the 3rd U.S. Circuit Court of Appeals in Philadelphia.

In his latest ruling, Judge Brown said the plaintiffs were unable to support their claim that the insurers were fiduciaries under ERISA with respect to the employee benefit plans involved in the alleged conspiracy.

Among other charges, plaintiffs alleged that the insurers breached their fiduciary duty by failing to disclose contingent commissions and other types of compensation on Schedule A of Form 5500, which is provided to ERISA plan participants.

While Judge Brown has dismissed all the claims pending in the class actions, there are still a number of individual plaintiffs’ cases centering on the same issues against the insurers and brokers that were filed in federal courts around the country and subsequently transferred to Judge Brown, noted Mitchell J. Auslander, an attorney with Willkie, Farr & Gallagher in New York, who represents Marsh & McLennan Cos. Inc. in the multidistrict litigation.

Judge Brown noted in his ruling that he will hold a conference call on January 24 to discuss remaining motions and other open issues in the case before the court.

While Judge Brown did not elaborate, Auslander said the court may address remaining individual policyholder cases.

He noted that most of the defendants and plaintiffs-class counsel have taken the position that the individual cases should be stayed pending the appeal in the 3rd Circuit.

Filed by Sally Roberts of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

A district judge in New York City denied a 500-pound police officer an increase in his disability pay, upholding a ruling by the city’s pension board that the officer’s morbid obesity, not an injury, was to blame for his inability to perform his job, according to court records.

Or, as the New York Daily News put it: “If there’s one thing that’s not getting any fatter on a 500-pound ex-cop, it’s his paycheck.”

State Supreme Court Justice Judith Gische upheld the pension board’s decision that Paul Soto was only entitled to regular disability pay—equal to half his salary—rather than disability pay suffered in the line of duty since Soto’s obesity, not the fact that he tripped on the way to see his doctor, was the reason he was unable to work.

Soto, who is 5-7 and 40 years old, joined the police force in 1993, when he weighed 250-pounds. By 2004, Soto weighed in excess of 300 pounds and suffered from hypertension, morbid obesity and sleep apnea.

Unable to perform his duties as a police officer, he requested disability retirement pay, according to court papers. While the request was pending, the police department put him on desk duty.

A year later, Soto tripped in the hallway of his knee surgeon, hurting his knee. As a result of the fall, Soto asked to receive accident disability pay equal to three-quarters of an officer’s salary.

In denying Soto’s request for accident retirement pay, Judge Gische wrote in her 10-page decision, which was reached in December but not filed with the Manhattan county clerk until January 8, that the retired police officer’s knee injury did not make him any less able to perform his desk duties.

“Leaving aside whether petitioner’s accident was due to his own negligence, and even assuming that this was, in fact, an ‘accident’ … [h]e was not any less able to perform his duties as an officer after the fall than he was before it.”

—Jeremy Smerd

Dear Missing the Link:



First, your question contains a lot of good news. The commitment your management team is taking to launch these initiatives is a positive signal they value and appreciate the talented employees you have and those you will be bringing in. Be sure to reinforce their efforts.

Rewards and recognition programs are an important way to engage and motivate employees. People want to feel good about the job they do. Employees who have positive self-esteem work harder and are more committed, and rewards and recognition contribute to building feelings of self-worth.

Be sure to match the types of rewards to your target audience and be aware that some employees respond best to public recognition, while others prefer private, individual reinforcement.

Retention initiatives can be broad in scope, including the onboarding processes you use, the relationship-building skills of your leaders, your internal career development and job posting programs and much more. And rewards and recognition programs should definitely be viewed and developed as part of your overall retention strategies, not as a stand-alone talent management process.

In the past, employee retention was viewed simply as one more HR program. But the cost of recruiting, selecting, training and managing talented (and harder-to-find) employees continues to grow, and research proves that, in general, the longer an employee stays, the more production he or she is. And isn’t it all about productivity and performance?

Progressive-thinking companies view retention as the backbone of their talent management processes, with compensation, benefits, rewards and recognition, job design, leader training and even corporate culture contributing to it.

So, applaud your management for taking positive steps to make your organization a great place to work and stay, but don’t miss this opportunity to use the rewards and recognition you provide to not only engage and motivate but to keep people in your organization longer.

SOURCE: Craig R. Taylor,TalentKeepers, Maitland, Florida, April 30, 2007.

LEARN MORE: Visit our archive to access hundreds of articles and other material pertaining to retention. Also, a sampling of material on recognition and incentives.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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Dear Workforce Newsletter

General Motors Corp. avoided further litigation when it agreed Tuesday, January 15, to settle for $37.5 million a class-action lawsuit filed by 401(k) plan participants who suffered huge losses after GM shares fell sharply.

The suit was filed in 2005 after Detroit-based GM’s shares plunged 75 percent, causing GM employees and retirees to suffer substantial financial losses in their 401(k) plans. The agreement enforces changes that GM has already made to its 401(k) plans, which includes GM no longer matching employees’ salary deferrals with GM stock or requiring employees to invest some of their own 401(k) plan contributions in GM common stock.

Also as part of the agreement, retirees will be offered discounted financial counseling from Ayco, a subsidiary of Goldman Sachs, for which employees will pay $30 for a year of advising services. This type of service usually costs employees around $200. GM has agreed to pick up the balance for those employees who elect to participate in this program.

U.S. District Judge Nancy G. Edmunds will hold a hearing to grant preliminary approval of the settlement. That hearing date has not yet been scheduled.

Several charges were filed against GM in the suit, including that it “breached fiduciary duties in violation of the Employee Retirement Income Security Act of 1974” and “failed to provide participants with complete and accurate information regarding stocks and the true risks of investing,” according to court documents.

GM’s poor financial state was disclosed in a 2003 filing with the Securities and Exchange Commission, which promptly launched an investigation into the automaker’s accounting practices.

According to court documents, 260,000 employees and retirees were participants in plans that held assets of $21 billion as of 2003. The settlement covers anyone enrolled in GM’s 401(k) plans between March 1999 and May 2006.

Filed by Jeff Casale of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

When wellness programs are offered, a sizable majority of employees at small and midsize companies take advantage of them, a survey has found.

Although cost is becoming a determining factor in employee selection of health plans, less than half of employees at small and midsize companies are interested in enrolling in plans that would offer lower co-payments and deductibles for completing health risk assessments and wellness screenings, according to the survey, conducted online by the Des Moines, Iowa-based Principal Financial Group.

However, 74 percent of employees with access to educational tools and on-site health screenings used them in 2007, the survey found.

Unfortunately, small and midsize employers have been slow to fully embrace wellness programs, according to the Principal Financial Well-Being Index survey. Just 14 percent of workers have access to educational tools and fitness center discounts, and just 10 percent have on-site health screenings available.

The survey found that wellness benefits were more likely to be offered by larger firms. While 26 percent of employers with 501 to 1,000 employees offered educational tools and discounts, only 12 percent of employers with 500 or fewer employees did so, the survey found.

The survey included responses from 1,154 employees and 514 retirees from employers with 10 to 1,000 employees. The information was gathered between October 22 and October 30, 2007.

Among other key findings:

● 45 percent of employees expressed some level of interest (either somewhat interested or very interested) in a health plan that contains a wellness component that would allow employees to have reduced deductibles and co-payments for participation, while 23 percent said they were neither interested nor uninterested in such a plan.

● Flexibility in selecting doctors, networks and facilities is declining in importance among employees and retirees, with 23 percent of responding employees and retirees rating them as essential, compared with 31 percent in 2006.

● 25 percent chose health plans based on their monthly paycheck deduction, while 18 percent made the decision based on the deductible amount.

For further information about the survey’s findings, visit www.principal.com/wellbeing/index.htm.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Massachusetts residents who can afford to buy health insurance coverage but do not would pay penalties of as much as $900 in 2008, under proposed regulations.

Under the state’s landmark 2006 law, intended to move Massachusetts close to universal health care coverage within a few years, the penalty for not having coverage in 2007 was the loss of the personal exemption for state income tax purposes, which equaled $219.

In 2008 and succeeding years, the penalty is based on one-half of the premium of the lowest-cost plan available through a state agency known as the Connector Authority. The law, though, left it to the Massachusetts Department of Revenue to provide the details.

Under the regulations, the penalty for not having coverage would be linked to income and the period of time that a person is uninsured. For example, a 27-year-old with income exceeding 300 percent of the federal poverty level would pay a penalty of $76 for each month he or she was uninsured, up to $912 if uninsured for the entire year.

The penalties are intended to encourage state residents to purchase health insurance.

However, the penalties do not apply to those who can prove that affordable health insurance coverage is not available. And, under existing regulations, employees earning between $35,000 and $40,000 a year who decline individual coverage offered by their employers will not be penalized if their share of the monthly premium exceeds $200, while employees earning between $40,001 and $50,000 a year declining individual employer-provided coverage are exempt from the penalties if their monthly premium cost is more than $300.

Regardless of coverage costs, the penalties would apply to individuals earning more than $50,000 a year, couples earning more than $80,000 a year or families with children earning more than $110,000.

The penalties do not apply to individuals earning up to $15,324, since their health insurance premiums are completely subsidized by the state. Currently, about 75 percent of state residents who lacked coverage before the enactment of the 2006 law now are insured, with most of the newly insured obtaining coverage through a state premium subsidy program available to lower-income residents and through an expansion of Medicaid, which is offered to the very poor.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

CareerBuilder is increasing it involvement with talent management consulting through its newly launched subsidiary, Personified.

The new division offers consulting on various aspects of talent management, including employee acquisition and retention; recruitment process outsourcing; employment branding; inclusive culture development; and employee engagement.

Mary Delaney, who has 20 years of experience in sales and business development, is company president, according to a release.

Most recently, Delaney served as chief sales officer for CareerBuilder.com, leading the enterprise and recruiter business unit teams of the company’s sales force. In 2006, Delaney started the company’s human capital consulting division, which led to the development of Personified.

Prior to joining CareerBuilder, Delaney managed the merger of Headhunter.net and CareerBuilder. She oversaw two acquisitions and orchestrated launches in new markets. Prior to that, Delaney was senior vice president for InterCall Inc., a conference services provider, where she developed the company’s long-term national sales strategy. Early in her career, Delaney worked in a variety of sales management positions at Nestle Corp. and Async Corp., a voice-mail service company.

According to CareerBuilder’s annual job forecast, 41 percent of employers say they have positions for which they can’t find qualified talent. The company anticipates further tightening of the labor market, driven by baby boomers entering retirement years and a lack of skilled talent.

—Gina Ruiz

The workers’ compensation exclusive remedy rule bars a Hollywood grip who lost two fingertips while working on the television show Dragnet from suing Universal City Studios, an appeals court affirmed.

California’s 2nd Appellate District ruled Thursday, January 10, in Christopher Carpenter v. Universal City Studios L.L.L.P. that the studio was a “special employer” when Carpenter injured his hand in 2003.

Under California law, special-employer status occurs when an employee works for two employers and some control is relinquished from one company to another, court records show. Both the original, or “general employer,” and the second, or “special employer,” are on the hook for workers’ comp benefits.

Therefore, injured workers are barred from suing either employer and are limited to remedies within the workers’ comp system, court records show.

A trial court jury found that to be the case after Carpenter sued Universal seeking damages.

Carpenter claimed that Universal City Studios was no more than a landlord for a soundstage where he was injured and that his real employer was Universal Network Television, court records state. Universal’s corporate interests include a theme park, TV and motion picture studios, and production for music videos, commercials and television shows.

The appeals court upheld the jury’s finding. It ruled that although Universal’s corporate structure is “conflicting and at times confusing,” there is substantial evidence to support the jury’s finding that Universal City Studios and Universal Network Television “were branches of the same employer.”

Filed by Roberto Ceniceros ofBusiness Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

State workers’ compensation fee schedules are effective in controlling medical costs but have a limited ability to bring workers’ comp utilization levels for similar injuries closer to group health levels, according to a study released Thursday, January 10, by NCCI Holdings Inc.

The study from Boca Raton, Florida-based NCCI found that most states reimburse workers’ comp medical care at prices marked above what group health plans pay. Additionally, most states without fee schedules reimburse medical providers at a higher markup over group health than states with fee schedules.

But when comparing workers’ comp and group health costs for similar injuries, higher utilization in workers’ comp accounts for more of the difference than the price markups over group health, the NCCI reported. That finding holds true regardless of the type of fee schedule used in a state or whether a state has a fee schedule.

“We conclude that fee schedules by themselves have a very limited ability to bring workers’ comp utilization closer to group health levels,” the NCCI said.

However, introducing fee schedules can play a significant role in reforming workers’ comp systems, the NCCI said.

Among states with fee schedules, reimbursements for doctor office visits and physical therapy are priced at about the same amount as in group health. Radiology treatments and surgery, however, show higher markups above group health than other medical services.

The study, “Making Workers’ Compensation Medical Fee Schedules More Effective,” is available at www.ncci.com/ncci/index.aspx.

Filed by Roberto Ceniceros of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.