The Markets January 28, 2009

Tenn. Hospital System Stops 403(b) Match

The West Tennessee Healthcare system has suspended its 403(b) plan match.
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A news report in The Jackson Sun said the health system’s board made the move on an indefinite basis.”The expense changes we are going through are a last resort,” said Richard Parks, president and CEO of West Tennessee Healthcare, “and certainly meant to be temporary.”

Jan Boud, vice president of communications and human resources, said: “It will have to be evaluated on an ongoing basis,” according to the Sun.

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It is estimated that the 403(b) match suspension will save the hospital system as much as $400,000 monthly. The news report said the decision was caused by fewer patients coming to the hospital and larger write-offs of unpaid patient bills from a larger number of uninsured patients than in the past.

An upstate New York health-care system made a similar move for its 403(b) program in early December (see “403(b)s Also Lose the Match’).

Compliance January 28, 2009

Court Rules Document Request not Subject to ERISA Time Limit

A court determined that an employer did not have to provide certain documents requested by cash balance plan participants within 30 days as required by the Employee Retirement Income Security Act (ERISA).
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In its opinion, the U.S. District Court for the Western District of Kentucky said Commonwealth Industries, Inc. “acted in a reasonably timely and sufficient manner to comply with the plaintiffs’ requests.” Judge Jennifer B. Coffman noted that the employer attempted to produce the documents, even trying to timely obtain those that were not in its possession.

According to the opinion, specifically, the plaintiffs claim that the defendants did not provide the following documents within the 30 days as required by ERISA §§ 104(b)(4), 502(a)(1)(A), (c)(1): a complete copy of all ERISA § 204(h) notices; a complete copy of the plan amendments; a statement of the plaintiffs’ respective normal retirement accrued benefit; and a complete copy of the plan document reflecting the form of benefits available upon retirement, as represented on the pan retirement application. The plaintiffs ultimately received all requested documentation, but asked the court for a penalty of $110 per day for each day past the 30-day requirement that the documents had not been received.

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Coffman noted that the § 204(h) notice is a form communication that does not differ among employees, so it did not need to be sent separately in response to each request. The court also found that the complete wording of a 1997 amendment was included in a new comprehensive plan document provided to all participants upon the change from a traditional pension to a cash balance plan, so participants were provided with a complete copy of the plan amendment.

The court further said that those types of historical documents are not the types of documents required to be provided under ERISA § 104.

As for the requested statement of the accrued benefits, the court said the information requested was not formal plan documents or summaries of material modifications, so they did not have to be provided within the 30-day time limit of ERISA.

The case is Collins v. Commonwealth Industries Inc., W.D. Ky., No. 07-57-C, 1/26/09.

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