1. CHILDREN CONCEIVED AFTER DEATH OF WAGE EARNER/FATHER ENTITLED TO SOCIAL SECURITY SURVIVORS BENEFITS ONLY IF THEY INHERIT UNDER STATE INTESTACY LAW: Eighteen months after her husband, Robert Capato, died of cancer, Karen Capato gave birth to twins conceived through in vitro fertilization using her husband’s frozen sperm. Karen applied for Social Security survivors benefits for the twins. Social Security Administration denied her application, and the U.S. District Court affirmed. In accordance with Social Security Administration’s construction of the Social Security Act, the court determined that the twins would qualify for benefits only if, as the statute specifies, they could inherit from the deceased wage earner under state intestacy law. The court then found that Robert was domiciled in Florida at his death, and that under Florida law, posthumously conceived children do not qualify for inheritance through intestate succession. The court of appeals reversed, concluding that the statute defines child to mean,inter alia, “the child or legally adopted child of an [insured] individual,” the undisputed biological children of an insured and his widow qualify for survivors benefits without regard to state intestacy law. On review by the United States Supreme Court, the court of appeals was reversed. Social Security Administration’s reading is better attuned to the statute’s text and its design to benefit primarily those supported by the deceased wage earner in his lifetime. Moreover, even if Social Security Administration’s longstanding interpretation is not the only reasonable one, it is at least a permissible construction entitled to deference under federal law. Deference is appropriate when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that agency interpretation claiming deference was promulgated in the exercise of that authority. Here, the Social Security Administration’s longstanding interpretation, set forth in regulations published after notice-and-comment rulemaking, is neither arbitrary nor capricious in substance, nor manifestly contrary to the statute. It therefore warrants the Court’s approbation. Astrue v. Capato, Case No. 11-159 (U.S. May 21, 2012).
2. FOR VETERANS BENEFITS, PERSONALITY DISORDERS ARE NOT DISEASES OR INJURIES, AND ARE NOT COMPENSABLE: Morris served on active duty in the United States Army from July 31, 1964 to October 6, 1964. His entrance examination revealed no psychiatric abnormality. Subsequently, in mid-September 1964, he underwent an examination in connection with his separation from the service. That examination also revealed no psychiatric abnormality. Morris did, however, complain of experiencing nervous trouble and other symptoms. On January 21, 1966, Morris filed with the Department of Veterans Affairs a claim for disability compensation for a psychiatric disorder. In support of his claim, he stated that, while in basic training, he had suffered mental and physical abuse from his platoon sergeant, which had caused him to experience a nervous breakdown. In a May 5, 1966 rating decision, the VA’s Regional Office denied the claim. Noting that the file did not reflect any record of treatment for a nervous condition during service, the rating specialists concluded that Morris’s condition was in a chronic stage and had existed prior to service. The RO thus determined that there was no indication that Morris’s condition was incurred in or aggravated during service. On January 31, 1986, Morris sought to reopen his claim for a psychiatric disorder, by providing lay statements and a statement from a therapist. After the RO concluded that the additional evidence did not constitute new and material evidence sufficient to warrant reopening of the claim, Morris appealed to the Board. In its February 9, 1988 decision, the Board determined that, contrary to what the RO had found, Morris had come forward with new and material evidence in support of his claim. However, after reviewing the evidence, the Board concluded that the evidence did not show that Morris’s psychiatric symptoms were due to other than a personality disorder. Under the regulations, a personality disorder is not a disease within the meaning of applicable legislation providing for compensation benefits. Based upon the VA’s regulation, the Board therefore denied Morris’s claim of service connection for a psychiatric disorder. On February 23, 1988, the VA considered psychological evidence that Morris had submitted on May 5, 1987 while his appeal before the Board was pending. Following further denial of his claim, Morris presented additional medical evidence to the VA. This evidence indicated that Morris had been diagnosed with schizophrenia, and included an opinion from a VA physician that the schizophrenia had its onset during service. On June 14, 1990, the Board again denied Morris’s claim of service connection for a psychiatric disorder, concluding that the evidence still did not suffice to show that the previous diagnosis of a personality disorder was in error. Morris appealed to the Veterans Court. In the wake of a remand from the Veterans Court in March of 1992, the Board, in May of 1992, received the opinion of a psychiatrist who was an examiner for the Board. Based upon that opinion, the opinion of an independent medical examiner as well as additional evidence before it, the Board reopened Morris’s claim on February 3, 1993, and concluded that the preponderance of the old and new evidence, considered together, supports the claim for service connection for schizophrenia. At the same time, however, the Board determined that its February 1988 decision was well supported by the evidence then of record and in accordance with all applicable legal criteria, and that the decision was thus final. Subsequently, in April of 1993, the RO awarded service connection for schizophrenia effective from May 5, 1987, and assigned a 100 percent rating from that date. The RO assigned May 5, 1987 as the effective date because that was when the VA received certain additional evidence from Morris. Thereafter, in 1996, the Board denied Morris’s claim that the 1966 RO decision contained clear and unmistakable error, and that the award of service connection therefore should be made retroactive to the date of his 1966 claim for benefits. The Veterans Court rejected an argument that the 1988 Board decision failed to apply the regulations correctly, noting no evidence that the Board incorrectly considered his condition a personality disorder. The court of appeals affirmed: under the regulations, personality disorders are not diseases or injuries within the meaning of the regulations, and are not compensable. This guy ought to get a medal for persistence. He served for 67 days and litigated for 50 years. Morris v. Shinseki, Case No. 2011-7061 (U.S. Fed. Cir. May 15, 2012).
3. MANY UNEMPLOYED OLDER WORKERS EXPERIENCE CHALLENGES REGAINING EMPLOYMENT AND FACE REDUCED RETIREMENT SECURITY: A study from the United States Government Accountability Office finds that, as with many other demographic groups, older workers’ unemployment overall and long-term unemployment rates have increased dramatically since the recession began in 2007. In December 2011, the unemployment rate for older workers was 6.0 percent, up from 3.1 percent at start of the recession, but down from its peak of 7.6 percent in February 2010. In particular, long-term unemployment rose substantially, and at a greater rate for older than younger workers. By 2011, 55 percent of unemployed older workers had been actively seeking a job for more than half a year. Meanwhile, the long-term trend of rising labor force participation rates among older workers has continued, with the recession possibly amplifying this trend. Long-term unemployment can put older workers at risk of deferring needed medical care, losing their homes, and accumulating debt. The experts and staff GAO interviewed at some one-stop career centers, as well as the unemployed older workers who participated in focus groups, identified employer reluctance to hire older workers as a key challenge that older workers face in finding reemployment. They also identified out-of-date skills, discouragement/depression and inexperience with online applications as reemployment barriers for older workers. Some one-stop staff who serve older workers told GAO that providing the type of assistance some older workers need to address these unique challenges can be very time-consuming. Long-term unemployment can substantially diminish an older worker’s future retirement income in several ways. First, it can force a worker to stop working and stop saving for retirement earlier than the worker had planned. Second, long-term unemployment can lead individuals to draw down their retirement savings to cover living expenses while they are unemployed, which was a common life experience described by focus group participants. GAO illustrated how a hypothetical worker who had $70,000 in retirement savings at age 55 and withdrew 50 percent of those savings during a 2 year period of unemployment, would need about another 5 ½ years of work and saving to rebuild the retirement account to the level it had been before unemployment began. In addition, long-term unemployment can motivate older workers to claim early Social Security retirement benefits, which will result in lower monthly benefits for workers and their survivors for the rest of their lives. Experts GAO interviewed selected various policies that have been proposed to help address unemployed older workers’ reemployment challenges. Experts selected these policies from a broad list GAO compiled from previous academic studies. For example, two of the policies that experts selected would provide incentives such as temporary wage or training subsidies for employers to hire long-term unemployed older workers. In the current context of high unemployment and slow job creation, the impact of most of these policies is likely to be muted by limited job openings. After an interagency taskforce issued its report on the aging of the American workforce in 2008, the Department of Labor implemented several strategies the report recommended, but since the recession started, Labor shifted focus to responding to increased demand for services. As the economy improves, Labor could refocus on older job seekers and consider what additional strategies would help address their unique reemployment challenges in light of recent economic and technological changes. GAO-12-445 (April 2012)
4. CASE FOR INDEXING: Since its beginnings in the early 1970s, indexing as an investment strategy has grown tremendously, to the point that according to data from Morningstar, assets in U.S.-domiciled index mutual funds and ETFs accounted for 28% of equity and 17% of fixed income funds as of year-end 2011. Indexing refers to an investment methodology that attempts to track a specific market index (either broadly or narrowly focused) as closely as possible. A paper from Vanguard explores the theory behind indexing as an investment strategy, and provides evidence to support its use in investor portfolios. To do so, Vanguard first established a baseline by comparing the records of actively managed funds with various unmanaged benchmarks. The paper demonstrates, first, that the average U.S.-domiciled actively managed fund has underperformed a style benchmark with greater volatility over long time periods. Second, reported performance statistics can change markedly once survivorship bias is accounted for. And, third, that persistence among past winners is no more predictable than flip of a coin. Following its evaluation of active management, Vanguard describes the theory behind indexing, focusing on the zero-sum game. It shows how both indexed and active strategies performed within this framework, and discusses how using a low-cost index fund can lead to a greater probability of outperforming higher-cost actively managed funds. The paper focuses on key characteristics of a well-managed index fund, and ultimately concludes that indexing can be a viable strategy for a wide range of investors. Of course, Vanguard founder and former Chairman John C. Bogle created the first index fund available to individual investors.
5. HOW TO HELP YOUR EMPLOYEES GET READY FOR RETIREMENT: How many of your retirement-age employees are just hanging around so they can receive benefits and collect paychecks, simply because they cannot afford to stop working? Dealing with an aging, financially unprepared workforce is a reality that should concern employers, according to Business Management Daily. The percentage of people who expect to retire after age 65 has risen dramatically in the past two decades. Health care costs for employees older than 65 are more than double that of employees age 45 to 55. And while the statistical rate of work-related accidents does not increase dramatically for employees over age 65, when incidents do occur they are more severe and cost more workdays. So it is in employers’ best interests to improve the retirement outcomes for their employees by creating a culture of retirement readiness. Here is a six-step plan:
- Conduct a company retirement readiness assessment. Find out how many employees in each age group participate in your retirement plans. If you see pockets of low participation, create campaigns that speak directly to them.
- Evaluate your plan design. Change anything that does not encourage participation.
- Communicate to change behavior. You need to communicate differently with a 25-year-old than with a 62-year-old. The older worker does not need to hear about the benefits of a company match. If you’re looking to change behavior, make it easier.
- Offer retirement income solutions. Show employees how to convert their retirement savings to retirement income. Most of the education about retirement plans revolves around saving, investing, diversification and growth of money. Start talking about how employees can make sure their nest eggs will last throughout retirement.
- Be strategic with company matching dollars. Maybe your organization has always offered a 100% match on the first 2% of income that an employee contributes to the plan. How about offering to contribute a 25% match to the first 8% that the employee invests? It will cost your company the same while encouraging the employee to save more.
- Measure constantly. Designing a plan and a strategy is not a one-time thing. Measure your success at least annually to determine if more employees are participating in your firm’s plan and if they are investing a greater proportion of their incomes. If they are not, change your strategy again.
6. FEDERAL STATUTE CRIMINALIZING IDENTITY THEFT APPLIES REGARDLESS OF WHETHER VICTIM IS CURRENTLY LIVING: Zuniga-Arteaga appealed her conviction for aggravated identity theft, in violation of federal law. On appeal, she argued that the federal law could not be applied to her because the provision did not cover theft of a person’s identity when that person is no longer living. The U.S. court of appeals affirmed. Zuniga-Arteaga had been indicted for falsely representing herself to be a citizen of the United States, as well as for possessing and using a means of identification of another person in relation to the offense (that is, she committed “aggravated identity theft”). She filed a Motion for Judgment of Acquittal, arguing that the statute did not apply because the person whose identity she used was deceased. In affirming, the court followed four other circuits in holding that the statute punishes theft of identity of any actual person, regardless of whether that person is still alive. Because Congress did not define the term “person,” the court looked to its ordinary meaning. Congress did not limit the term to the identification of individuals still living. Absent any indication to the contrary, Congress’s use of the term “specific individual” in a way that captures both the living and the dead suggests that Congress did not intend to limit the provision. Ultimately, Zuniga-Arteaga offered no basis for believing that her proposed interpretation better reflects Congress’s intent than the alternative adopted by four other circuits. If anything, her arguments confirm the relative strength of the interpretation of the statute adopted. United States of Americav. Zuniga-Arteaga, Case No. 11-11673 (U.S. May 21, 2012).
7. LARGEST U.S. IPO’s: Facebook priced its initial public offering at $38 a share and raised at least $16 Billion. Here are five largest U.S. IPOs (before Facebook):
- Visa Inc. raised $19.65 Billion on March 18, 2008.
- General Motors raised $18.4 Billion on November 17, 2010.
- AT&T Wireless Group raised $10.62 Billion on April 26, 2000.
- Kraft Inc. raised $8.86 Billion on June 12, 2001.
- UPS raised $5.47 Billion on November 9, 1999.
8. TOP 10 MOST-STOLEN VETTES: More than one-in-ten Corvettes have been stolen over the past three decades, says a report today from National Insurance Crime Bureau, which tallies the Top 10 most-stolen models and the Top 10 states for stolen Vettes. Here are the results, reported by advisen.com:
Model year Total thefts:
Here are the Top 10 states for Vette theft, from 1981-2011:
State Number stolen
New York 7,926
New Jersey 5,287
Factoid: between 1953 and 2011, 1,526,747 Corvettes were built; 134,731 were stolen.
9. AMERICA’S MOST BIKE-FRIENDLY COMMUNITIES: The United States is now home to 214 bicycle-friendly communities in 47 states, according to the League of American Bicyclists. Municipalities are evaluated based on their efforts to promote bicycling, investments in bicycling infrastructure and bicycling education programs. The top three – not surprisingly out West – are Boulder, Colorado; Davis, California; and Portland, Oregon. Based upon our perusal of the list, in Florida only Gainesville, Boca Raton, Orlando, Sanibel, St. Petersburg and Tallahassee made the grade.
10. FPPTA 28TH ANNUAL CONFERENCE: The Florida Public Pension Trustees Association’s 28th Annual Conference will take place on June 24-27, 2012 at the Hilton Walt Disney in Lake Buena Vista. The hotel is located across the street from Downtown Disney and has complimentary transportation to Disney parks. There are a variety of restaurants within the hotel including a Disney character breakfast Sundays at Covington Mill. A link on FPPTA’s web site,www.fppta.org, will take you to the Hilton Walt Disney site to make your room reservations. Sunday, June 24th the Associates Advisory Board is sponsoring the 24th Annual Associates Charitable Golf Classic held on Disney’s beautiful Magnolia Golf Course. You may access information and updates about the Conference at FPPTA’s website. All police officer and firefighter plan participants, board of trustee members, plan sponsors and anyone interested in the administration and operation of the Chapters 175 and 185 pension plans should take advantage of this Conference.
11. GOLF WISDOMS: The wind is in your face on 16 of the 18 holes.
12. PUNOGRAPHICS: When chemists die, they barium.
13. QUOTE OF THE WEEK: “Tell your boss what you think of him, and the truth shall set you free.” Unknown
14. ON THIS DAY IN HISTORY: In 1844, Samuel Morse taps out “What hath God wrought” (first telegraph message).
15. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.
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