Month: August 2003

An interesting article by Ted Siedle for the Benchmark Companies–“Invasion of the Class Action Securities Lawyers“–states that lawyers who represent large pension plans are being paid hefty referral fees by securities class action law firms which in some cases are not being disclosed to the client. The securities firms, according to the article, are seeking to secure lucrative lead counsel status in cases the firms seek to bring. The article reports that “[w]hile ten years ago you’d hardly find a lawyer in the crowd at a pension conference, today pension conferees are subject to an “invasion of the securities class action lawyers” because that is where securities lawyers build the relationships to attain lead counsel status in some of these cases. The article goes on to make the point that when lawyers are advising pension boards about whether to participate in a securities class action lawsuit and when those lawyers advising the board then receive referral fees from the securities lawyers, this is not impartial advice and the financial interest should be disclosed to the client. The article warns that those making decisions for pensions plans “should take the time to become knowledgeable about the hidden financial incentives that may motivate their advisers so they can make informed decisions.”

This is the first that I have heard of such arrangements. However, a speaker I heard at an ERISA fiduciary conference stated that when securities firms do not attain lead counsel status in a securities class action law suit, some are then filing ERISA lawsuits instead on behalf of plan participants.

David Giacalone at EthicalEsq. this summer had a great discussion of fee arrangements in the ERISA lawsuits being filed on behalf of participants in 401(k) plans who have lost money from investments and discussed ethical considerations in connection with those fee arrangements. It would be great to hear what he has to say about the fee arrangements discussed here today.

The Department of Labor has posted on its website comments regarding the proposed COBRA regulations. Some of the major concerns expressed were:

• Lack of time to implement changes.
• That the new notice requirements contained in the regulations are not mandated by statute.
• That the regulations should clarify conflicts between the regulations and Treasury regulations.

Comments of Note: The Employee Benefits Institute of America commented that guidance is needed regarding the relationship between the COBRA regulations and the DOL claims regulations, and that it would also be helpful if the final COBRA regulations were to specify for each approved method of delivery when the COBRA election period begins to run. McDermott Will & Emery suggested that examples should be added throughout various parts of the regulations for clarity and that confirmation is needed that a TPA could be designated as the “plan administrator” for the limited purpose of COBRA notification requirements.

Additional Note: For those who have not noticed, over on the right I have posted links to the new COBRA regulations, as well as links to various articles on the subject as well. I have included a link to these comments posted on the DOL website for future reference since they are so useful in parsing out all of the subtleties and technicalities of these new regulations.

Watson Wyatt has posted a useful comparison of NYSE and NASDAQ Shareholder Approval Requirements for Equity Compensation Plans which became effective June 30, 2003.

Jake Bleed for the Arkansas Democrat-Gazett writes a very interesting article on some developments in Arkansas on a state “any willing provider” (“AWP”) law: “Blue Cross hopes suit preempts new ruling.” According to the article, Arkansas Blue Cross and Blue Shield filed suit in federal court Tuesday asking for “a judicial determination” on how a U.S. Supreme Court decision in April might affect the state’s “any willing provider” law. The case referred to is the U.S. Supreme Court case of Kentucky Association of Health Plans v. Miller (discussed previously in posts which you can access here) which held that Kentucky’s AWP law was not preempted by ERISA. According to the article, the Arkansas AWP law had been barred from being enforced by a federal appeals court in 1998, which concluded that it ran contrary to ERISA. However, with the recent Supreme Court case holding that a Kentucky law was not preempted by ERISA, certain providers have written to Blue Cross, demanding access to the plans’ network and citing the Supreme Court case as authority for the proposition that the Arkansas law should be enforced. The case being filed is an attempt by Blue Cross to resolve the dispute.

“Retirement plans return to limelight“: an interesting article by Jennifer Kho for the East Bay Business Times reports that smaller companies are starting to establish retirement plans again, a sign that things are looking up. Quote of note: “According to the Society of Human Research Management, companies with defined benefit retirement plans have dropped from 54 percent in 1999 to 42 percent in 2003, while those with defined contribution retirement plans, including 401(k)s with or without matches, have increased from 71 percent to 75 percent in that time.”

CBS Marketwatch has this article on “orphan plans”: “Disconnected from your 401(k) ‘Orphan’ plans pose logistical woes for participants.” For those who do not know, orphan plans are plans which no longer have a plan sponsor or fiduciary. According to the article, when the DOL discovers such a plan it usually tries to locate former fiduciaries or goes to court to have an independent fiduciary appointed to distribute out assets.

The Motley Fool has this helpful resource: “Ten Ways to Size Up a Broker.”

OnQue Technologies has an article discussing ERISA fiduciary duties from a health plan perspective: “What Is Your ERISA Fiduciary Duty To Beneficiaries?“

Dan Morse for the Wall Street Journal: “Older Workers in the Lurch For an Employee Laid Off After Decades On the Job, Question Is What to Do Next.”

Also, in yesterday’s Wall Street Journal : “Attorneys Face a Paradox In the SEC Conduct Rules.” The article discusses the conflict between SEC rules and some state laws governing attorney conduct, a subject which was previously discussed by Mike O’Sullivan at CorpLawBlog here.

Walter Olson at Overlawyered provides some links to articles reporting on the lawsuits already being filed over the recent power outage in the Northeast.

Thanks to Michael Fox at Jottings by an Employer’s Lawyer for this interesting article from MSNBC News: “ Have Never Seen Such a Fever Pitch.” The main point of the article is that terminated employees with dismal job prospects are turning to litigation for more lucrative settlements. However, the article gives some very suprising statistics. One is that “monetary awards for employment-related claims have jumped about 290 percent.” Also, according to the article, the “largest increases in discrimination complaints [EEOC] in 2002 were for age discrimination, with about 20,000 complaints filed, up 14.5 percent from the previous year, followed by national origin (about 9,000 complaints, up 13 percent), and religious beliefs (about 2,600, up 21 percent).”

How Appealing has done a great job of covering all of the Ten Commandment cases and especially the one recently involving Alabama Chief Justice Roy Moore. Here’s an article from Focus on the Family with more of the Chief Justice’s personal thoughts on what he is doing: “Showdown Set for Ala. Commandments Case.”