July 2010
Department of Labor Issues Additional Guidance on Definition of Son or Daughter under FMLA
Recently, the DOL released clarification guidance regarding the definition of “son or daughter” as it applies to an employee taking FMLA-protected leave for the birth or placement of a child, to care for a newborn or newly placed child, or to care for a child with a serious health condition. Sometimes the DOL issues this type of guidance if there is enough evidence that many employees and employers are unsure of how the FMLA applies when there is no legal or biological parent-child relationship.
The actual DOL guidance is available here:
Background
The FMLA entitles an eligible employee to take up to 12 workweeks of job-protected leave:
- Because of the birth of a son or daughter of the employee and in order to care for such son or daughter
- Because of the placement of a son or daughter with the employee for adoption or foster care
- To care for a son or daughter with a serious health condition
The FMLA defines a “son or daughter” as a “biological, adopted, or foster child, a step-child, a legal ward, or a child of a person standing in loco parentis,” who is:
- Under 18 years of age; or
- 18 years of age or older and incapable of self-care because of a mental or physical disability
The challenge for some employers and administrators is how to interpret the relationship when the employee does not have a biological or legal relationship with a child, and the employee is requesting FMLA leave.
What is a Person Standing In Loco Parentis?
Congress intended the definition of “son or daughter” to reflect “the reality that many children in the United States today do not live in traditional ‘nuclear’ families with their biological father and mother. Increasingly, those who find themselves in need of workplace accommodation of their child care responsibilities are not the biological parent of the children they care for, but their adoptive, step, or foster parents, their guardians, or sometimes simply their grandparents or other relatives or adults.” Congress stated that the definition was intended to be “construed to ensure that an employee who actually has day-to-day responsibility for caring for a child is entitled to leave even if the employee does not have a biological or legal relationship to that child.”
In loco parentis
is commonly understood to refer to a person who has put himself in the situation of a lawful parent by assuming the obligations incident to the parental relation without going through the formalities necessary to legal adoption. It embodies the two ideas of assuming the parental statusanddischarging the parental duties.
Whether an employee stands in loco parentis to a child is a fact issue dependent on multiple factors. Courts have enumerated factors to be considered in determining in loco parentis status; these factors include:
- The age of the child
- The degree to which the child is dependent on the person claiming to be standing in loco parentis
- The amount of support, if any, provided
- The extent to which duties commonly associated with parenthood are exercised
The FMLA regulations define in loco parentis as including those with day-to-day responsibilities to care for and financially support a child.
Employees who have no biological or legal relationship with a child may nonetheless stand in loco parentis to the child and be entitled to FMLA leave.
The DOL in this additional guidance clarified that the regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child.
Example 1
: An employee provides day-to-day care for his or her unmarried partner’s child (with whom there is no legal or biological relationship), but does not financially support the child. The employee could be considered to stand in loco parentis to the child and therefore be entitled to FMLA leave to care for the child if the child had a serious health condition. The same principles apply to leave for the birth of a child and to bond with a child within the first 12 months following birth or placement.
Example 2
: An employee who will share equally in the raising of a child with the child’s biological parent would be entitled to leave for the child’s birth because he or she will stand in loco parentis to the child. Similarly, an employee who will share equally in the raising of an adopted child with a same-sex partner, but who does not have a legal relationship with the child, would be entitled to leave to bond with the child following placement, or to care for the child if the child had a serious health condition, because the employee stands in loco parentis to the child.
Example 3
: A child’s biological parents divorce, and each parent remarries. The child will be the “son or daughter” of both the biological parents and the step-parents and all four adults would have equal rights to take FMLA leave to care for the child.
Example 4
: Examples of situations in which an in loco parentis relationship may be found include where a grandparent takes in a grandchild and assumes ongoing responsibility for raising the child because the parents are incapable of providing care, or where an aunt assumes responsibility for raising a child after the death of the child’s parents. Such situations may, or may not, ultimately lead to a legal relationship with the child (adoption or legal ward), but no such relationship is required to find in loco parentis status. In contrast, an employee who cares for a child while the child’s parents are on vacation would not be considered to be in loco parentis to the child.
It should be noted that the fact that a child has a biological parent in the home, or has both a mother and a father, does not prevent a finding that the child is the “son or daughter” of an employee who lacks a biological or legal relationship with the child for purposes of taking FMLA leave.
Neither the statute nor the regulations restrict the number of parents a child may have under the FMLA
.
What Should an Employer or Administrator Do?
- If an employer has questions about whether an employee’s relationship to a child is covered under FMLA, the employer may require the employee to provide reasonable documentation or statement of the family relationship. A simple statement asserting that the requisite family relationship exists is all that is needed in situations, such as in loco parentis, where there is no legal or biological relationship.
- Make sure that the employer’s FMLA policies do not conflict with the DOL’s interpretation in that either day-to-day care or financial support may establish an in loco parentis relationship, where the employee intends to assume the responsibilities of a parent with regard to a child.
HHS Releases Final Application, Instructions, and Application Submission Do’s and Don’ts on Early Retiree Reinsurance Program
In earlier client alerts (click here to access previous alerts), we reported that the Secretary of the Department of Health and Human Services (HHS) released an interim final rule that implements the Early Retiree Reinsurance Program established by the Affordable Care Act (the “Act”).[1] On June 29, 2010, HHS released the final version of the Program’s application, instructions, and application submission do’s and don’ts to assist plan sponsors in applying for claim reimbursements (click to access Final Application, Final Instructions, Application Do’s and Don'ts). HHS also released new Frequently Asked Questions for the Early Retiree Reinsurance Program (click here to access FAQs). HHS previously issued Early Retiree Reinsurance Program Frequently Asked Questions on June 7, 2010 (click here to access FAQs).
June 29, 2010, was the first day applications could be submitted to HHS, and the application submission do’s and don’ts make it clear that HHS will only accept the Program application published on June 29, 2010. While the newly published Program application resembles previously published applications, the final and newly published version is formatted slightly different and it includes the mailing address for where the Program application and any attachments must be sent. HHS will only accept typed (not handwritten) applications at the official address and in the official format.
As you may recall, the Program provides $5 billion in financial assistance through reimbursements to employers to assist them in maintaining health coverage for early retirees ages 55 to 64 and their spouses, surviving spouses, and dependents who are not yet eligible for Medicare. Specifically, the Program will reimburse an employer for 80% of the costs incurred and paid (even if paid in a later year) for health benefits under an employment-based plan (net of negotiated price concessions) between $15,000 and $90,000 (indexed for plan years on or after October 1, 2011) for each early retiree (and his or her spouse, surviving spouse, and dependents), each plan year. Program participants will be able to submit claims for costs incurred and paid for health benefits retroactive to June 1, 2010.
The Program will end on January 1, 2014, when early retirees will be able to elect coverage that will be available under one of the health insurance exchanges, or when HHS has exhausted the $5 billion allocated to the Program, if earlier.
Because applications for reimbursements will be processed in the order received and funding is limited, employers will need to act quickly in assembling the required information now that the applications are being accepted.
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[1] “Affordable Care Act” means The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA).
Note: The information in this Alert was provided to Precept by Proskauer Rose LLP. Proskauer is an international full-service law firm with over 60 employee benefits attorneys located in offices across the United States. The information in this article is not intended as legal advice nor is it intended to provide a comprehensive review of the legal matters discussed. For more information about Proskauer, please contact Peter Marathas at (617) 526-9704 or pmarathas@proskauer.com. ©2010 Proskauer Rose LLP. All rights reserved. Used with permission.
Second Circuit Holds Taft-Hartley Funds are Inherently Conflicted, Potentially Affects Outcome and Scope of Future Benefit Claims Litigation
On June 24, 2010, the U.S. Court of Appeals for the Second Circuit held, in Durakovic v. Building Service 32 BJ Pension Fund, 2010 WL 2519645 (2d Cir. 2010), that Taft-Hartley funds (administered by boards of trustees consisting of an equal number of union and employer representatives) are inherently conflicted when making benefit determinations, and that this conflict needs to be considered by federal district courts when reviewing plan determinations under an arbitrary and capricious standard of review. The decision could potentially lead to significantly increased risks of liability and litigation costs for Taft-Hartley funds.
Background
In Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008), the Supreme Court held that the structural conflict affecting insurance companies that both decide and pay claims for benefits is a factor for courts to weigh in determining whether an insurance company abused its discretion in denying a claim for benefits, but does not modify the arbitrary and capricious standard of review that ordinarily applies to such determinations. The Glenn decision established a two-step analysis for courts that are asked to review claims determinations. The first step is to determine whether a structural conflict exists because the administrator both evaluates claims for benefits and pays for them. If so, the court then goes on to determine how much weight the conflict should be afforded in determining whether the administrator abused its discretion in denying the claim. The decision provided no specific guidance, however, as to how this standard should apply to Taft-Hartley plans.
The Second Circuit’s Decision
In Durakovic, a long-time office cleaner who suffered chronic pain and weakness in the years following a 1999 automobile accident applied for disability benefits from her union-sponsored plans. The plans provided benefits to those deemed totally and permanently unable to engage in any further employment for which the applicant was vocationally qualified. After consideration of a report from the Social Security Administration, two reports from Durakovic’s treating physician and two reports from independent physicians, the plans’ Board of Trustees denied Durakovic’s claim and appeal. Durakovic subsequently filed suit in federal district court challenging the funds’ decision.
On appeal, neither party disputed that the challenged decision was subject to an arbitrary and capricious standard of review by the court, since the plan documents accorded the Board of Trustees with the discretion to make benefit determinations. Both parties challenged, however, the district court’s decision that “the Funds’ conflict [was] a factor, albeit a relatively unimportant one.” The plans argued that they were not conflicted within the meaning of Glenn because Taft-Hartley funds are administered by an entity composed equally of union and employer representatives. Durakovic argued that the conflict should have been accorded more weight.
The Second Circuit first concluded that a structural conflict exists for all Taft-Hartley funds. In so holding, the Court reasoned that while the employer representatives on the Board of Trustees have fiduciary interests that weigh in favor of the trusts’ beneficiaries they also have representational and other interests that weigh to the contrary, i.e., the rejection of claims will reduce future employer contributions. According to the court: “That the board is . . . evenly balanced between union and employer does not negate the conflict . . . And that the administrator is here a trust, rather than the employer itself or a third-party for-profit institution, does not control.”
The Second Circuit acknowledged that its finding of an inherent conflict was at odds with the view of the Ninth Circuit, which held in Anderson v. Suburban Teamsters of N. Ill. Pension Fund Bd. of Trs., 588 F.3d 641, 648 (9th Cir. 2009) that a Taft-Hartley fund is not conflicted within the meaning of Glenn because it is a multi-employer trust in which the trustees do not have a personal interest and evaluations are made by a balanced board of trustees. The Second Circuit found that the Ninth Circuit’s decision rested on a “shaky foundation.”
Having concluded that a conflict existed, the Second Circuit next determined that the Board of Trustees’ decision was “unsupported by substantial evidence, and therefore arbitrary and capricious,” because it did not afford Durakovic’s treating physician reports sufficient weight and the plans’ independent report inappropriately concluded that Durakovic was vocationally qualified for three occupations. It therefore reversed the district court’s judgment and granted summary judgment in favor of Durakovic. The Court did not explain whether its ruling was directly justified by its finding with respect to the plans.
Implications
The Second Circuit’s conclusion that all Taft-Hartley funds suffer from an inherent conflict may result in increased litigation costs as there may be a more frequent effort by the plaintiffs’ bar to conduct discovery into the extent to which the inherent conflict influenced a benefit determination. Whether or not the outcome of these claims will ultimately be affected remains to be seen, however. Notwithstanding the requirement that district court’s treat Taft-Hartley plans as inherently conflicted, the district courts retain the discretion as to how much weight to accord the conflict.
Note: The information in this Alert was provided to Precept by Proskauer Rose LLP. Proskauer is an international full-service law firm with over 60 employee benefits attorneys located in offices across the United States. The information in this article is not intended as legal advice nor is it intended to provide a comprehensive review of the legal matters discussed. For more information about Proskauer, please contact Peter Marathas at (617) 526-9704 or pmarathas@proskauer.com. ©2010 Proskauer Rose LLP. All rights reserved. Used with permission.
Doctor’s Orders: The Case for Exercise
By Dr. Christopher H. Coulter, M.D., M.P.H.
Why bother to exercise? Because the benefits are overwhelming:
- Control blood pressure, blood sugar, and weight
- Reduce your risk for heart disease, diabetes, and some cancers
- Lower your cholesterol
- Reduce or avoid depression
- Sleep better
- Reduce your risk of osteoporosis and strengthen your bones, muscles, and joints
Okay, so you see some benefits that make sense to you. How do you get started? Everyone who gets lots of exercise seems to have their own routines – how do you find what’s right for you? Here are five key steps:
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Start slow. Whatever your current fitness level, don’t push yourself too hard. Take weeks or months to build up to the level of fitness you want.
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Be realistic. Don’t set a goal that will be difficult to reach – start with easy goals you have confidence that you can beat.
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Track your progress. Use a pedometer and chart your steps or put your minutes of exercise on a calendar.
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Include strength training. Muscle-building exercise has additional health benefits. You don’t need to join a gym and pump iron, but include activities in your routine like aerobics, calisthenics, or Pilates.
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Have fun. You are building a lifelong habit, and you will be more likely to succeed if you are doing something you enjoy.
It also helps to have a friend or family member you can share your routine with – it will motivate both of you. If you have a medical condition, ask your doctor before you try vigorous exercise. Your doctor may also have recommendations on what kind of activity would be best.
There are lots of great resources available to support you, from websites like the President’s Council on Physical Fitness (www.fitness.gov) and fitness facilities in your area. When you’re ready, you can take the President’s challenge and earn awards (www.presidentschallenge.org).
The only secret is to get started. Even 10 minutes a day can lead to sustainable health improvement.
THE CONTENTS OF THIS COMMUNICATION DO NOT CONSTITUTE LEGAL OR TAX ADVICE. We have provided this communication for general informational purposes only, and it is not intended to dispense legal or tax advice. Employers should consult their own legal and tax counsel to determine if there are legal issues that need to be addressed as part of the ongoing administration of their employee benefit plans and human resources policies.
