Fiduciary Breach Cases Continue to Make Headlines | Hall Benefits Law Seeks New Associate | ERISA Penalty Increases Now in Effect | Case Points to Importance of HIPAA Policies and Procedures

Plan Sponsors Under the Microscope as Fiduciary Breach Cases Make Headlines

Prestigious universities’ 403(b) plans are facing lawsuits for alleged breaches of fiduciary duties under ERISA. Universities in the midst of active lawsuits include Emory University, Johns Hopkins University, Massachusetts Institute of Technology (M.I.T.), N.Y.U., Yale University, University of Pennsylvania, Duke University, and Vanderbilt University, among others. The university lawsuits stem from allegations that the institutions failed to consider low-cost investment options and in many cases used multiple record keepers for their plans, driving up participant fees unnecessarily.

In Emory’s case, it’s not just the university being sued. Additional defendants include Emory Healthcare, Inc., Emory Pension Board, Emory Investment Management, and the Vice President of Investments and Chief Investment Officer. Jerome Schlicter, who represents employees of Emory University in the class-action, stated in a recent interview that the surge in retirement plan litigation correlates with increased employee knowledge and media coverage of retirement plans.

Major universities aren’t the only ones currently under the microscope. According to an August 18 article on, “Class-action lawyers are targeting a wider variety of alleged breaches of fiduciary duty in retirement offerings and suing a broader range of entities.”

The story of Novant Health, Inc., a nonprofit hospital system, serves as a cautionary tale for plan sponsors. After paying a $32 million settlement related to corporate fiduciary breaches in its retirement plan, Novant subsequently was required to hire an outside consultant, revise its investment options, and provide accurate communications to its participants. These are all steps Novant could have taken prior to the class action with the help of a good ERISA attorney.

Is it time to take a closer look at Retirement Plan Legal Compliance? Hall Benefits Law recommends that every business undergo a thorough legal review of its fiduciary responsibilities related to retirement plans.

Hall Benefits Law is Looking for an Experienced ERISA Associate

Hall Benefits Law is growing again, and we need your help! Our next associate will play a crucial role in the continued success of our rapidly growing, fast-paced ERISA law firm. If you know of a candidate with at least five years of ERISA experience who is looking to join our ERISA and Employee Benefits All-Star Team, please let us know and send them the Associate Job Description.

ERISA Penalty Increases Now in Effect

Wondering if it makes sense to have qualified ERISA attorneys perform a comprehensive review of your business’s Health and Welfare Benefits and Retirement Plan Legal Compliance? Increased maximum penalties for sixteen ERISA violations went into effect on August 1, 2016. The increased penalties represent adjustments for inflation which are required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. Some examples of these increased penalties:
  • Section 502(c)(2) – The maximum penalty for failure/refusal to properly file plan’s annual report increased from $1,100 per day to $2,063 per day.
  • Section 502(c)(5) – The maximum penalty for failure to file annual report for Multiple Employer Welfare Arrangements (MEWAs) increased from $1,100 per day per failure to $1,502 per day per failure.
  • Section 502(m) – The maximum penalty for failure of fiduciary to make a proper distribution from a defined benefit plan under section 206(e) of ERISA increasedfrom $10,000 to $15,909.
These examples underscore the need for a proactive and preventive approach to ERISA compliance. Click to see a full chart of the Inflation Adjustment Act Penalty Adjustments.

Case Points to Importance of HIPAA Policies and Procedures

The recent $650,000 settlement with Catholic Health Care Services (CHCS), part of the Archdiocese of Philadelphia, indicates that nonprofit Covered Entities and Business Associates are now targets of HIPAA auditors. CHCS is a Business Associate to a number of nursing homes, and as such their data protection practices must comply with new HIPAA Omnibus rules. At the root of the breach was a stolen phone which was unencrypted and was not password protected. At the time, CHCS had no policies in place addressing the removal of mobile phones containing Personal Health Information (PHI) or addressing how to handle a security incident involving such a breach. In addition to the fine it imposed, the Office of Civil Rights will monitor CHCS for two years as part of the settlement.

Does your business have a specific plan in place in the event of a PHI breach? Hall Benefits Law recommends every business have a comprehensive and robust HIPAA Policies and Procedures Manual, and we’d be happy to speak with you about the steps we can take together to get you there

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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