Multiemployer Plans: If a trustee is a fiduciary of several related benefit plans, how could he increase funding of one plan, at the expense of another? Wouldn’t it be a prohibited transaction? A fiduciary may not act on behalf of a party (Plan A) whose interests are adverse to the interest of the plan (Plan B). The key word is "fiduciary". In Advisory Opinion 80-8A, the DOL decided that, 1) if allocation of employer contributions between related multiemployer plans established under the same CBA is pursuant to a fixed formula in the CBA, the trustees are not exercising discretion, and are not engaging in a prohibited transaction, 2) if the trustees exercise discretion in determining how to allocate the funds, such allocations could be a prohibited transaction, since plans have competing interests as to a fixed pool of money. A recent Field Assistance Bulletin addresses this issue further. DOL’s conclusion would allow trustees to adopt, or change, a formula for allocating monies between plans, if the trustees are acting in a settlor capacity when the change is adopted. However, if the relevant documents (CBA, trust agreement, and plan documents) impose fiduciary standards on what might normally be settlor activities, then the allocation would likely violate fiduciary standards and result in a prohibited transaction. (Be careful: If the activities are settlor activities, then all related costs are settlor costs, and DOL won’t allow a plan to pay expenses related to settlor activities).

ÜberGuard: The effects that the Health Insurance Portability and Accountability Act ("HIPAA"), will have on union sponsored medical plans are intense and widespread. HIPAA's purpose is to protect the medical information of all individuals, so major changes must take place in union sponsored medical plans for any participating union to be in HIPAA compliance. 'Access Controls' will allow only those with 'need-to-know' clearance to view any participant's medical information in the health plan. Pre-HIPAA, multiple plans might have shared the same computers and databases. Under HIPAA, firewalls are needed: the medical information collected by the welfare fund can not be accessible to the pension or the SUB fund, for example. On the other hand, medical data collected by the pension fund might not be protected. This creates a dilemma, when the same claims staff work on pension and welfare benefits.

Cheek: HIPAA’s Privacy Provisions are projected to cost $17 billion. Is anything good coming out of HIPAA?

ÜberGuard: HIPAA will accomplish the following: 1) To securely and privately expedite patient medical information between health providers and insurance agencies, and 2) To increase the efficiency of administration and lower the cost of health care by decreasing fraud. Congress thinks the savings from standard electronic interchange of data will somehow offset the cost of the privacy provisions. In a nutshell - Mandatory Compliance will provide ease of administration due to a standardization of all data - financial and administrative. As well, Mandatory Compliance will protect the privacy of all transmitted patient medical data. Mandatory Compliance will cause major changes in the current processes and procedures that in some cases will involve the implementation of new systems. Non-compliance will bring hefty fines and a loss of business due to the inability to communicate with Compliant organizations.

(More of the interview next month.... Contact Chris Karr at 585.226.2635 or by email at chris.karr@uberguard.com)

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