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Cypen & Cypen
NEWSLETTER
for
OCTOBER 16, 2008

Stephen H. Cypen, Esq., Editor

1. “THE IMPACT OF THE FINANCIAL CRISIS ON WORKERS’ RETIREMENT SECURITY”:

On October 7, 2008, the House Committee on Education and Labor held a full committee hearing on the impact of the financial crisis on workers’ retirement security. The hearing examined how the current financial crisis is impacting pension funds and workers’ directed retirement accounts, such as 401(k) plans. According to a recent poll by the Associated Press, more than half of all Americans are worried that the ongoing financial crisis will force them to postpone retirement. In his opening statement, George Miller (D-CA), Chairman, said the emergency rescue plan alone will not magically turn the economy around. He is confident, however, that without it the country will not have the chance to moved forward. Miller said the House insisted that the plan include strong protections for taxpayers and tough accountability, neither of which was included in the President’s original request to Congress. Specifically referring to the testimony of Richard Fuld, CEO of Lehman Brothers, Miller said he “showed no remorse for his catastrophic mismanagement of the company. In fact, he repeatedly denied responsibility for running the storied Lehman Brothers investment house into financial oblivion. He refused to admit that his own reckless management -- and his industry’s success of keeping regulators at bay -- directly contributed to this historic financial crisis that is costing taxpayers, shareholders, and the nation’s current and future retirees billions of dollars from their nest eggs. All the while, he insisted on taking obscene multi-million dollar bonuses for his executive teammates.” Unlike Wall Street executives, American families do not have a golden parachute to fall back on. It is clear that their retirement security may be one of the greatest casualties of this financial crisis.

2. HOW WOULD YOU LIKE TO BE “COP FOR A DAY?”:

The Baltimore Police Department has produced a one minute video tape entitled “Cop for a Day.” Basically, two Baltimore police officers convince a regular citizen to suit up and be one of them. We “save lives every day. What do you do?” The closing thought is particularly on point: “And you thought your job was tough.” Watch the video at http://www.baltimorepolice.org/join-the-team/media-center/cop-for-a-day. (If the video stops and starts, let it play through once and then play it again.)

3. DEPUTY ACCUSED OF TAKING NICKELS FROM I-95 CRASH:

The Associated Press reports that at least one Brevard County, Florida, deputy is being investigated for allegedly gathering some of the government’s nickels that scattered on a highway after a U.S. Treasury truck was involved in a crash. Authorities say the armored truck rear-ended another truck in September, sending it into a guardrail. The armored truck overturned, killing a guard. The crash temporarily closed part of Interstate-95 in North Brevard County, as Secret Service crews worked to clear up the 3.7 million nickels. Most of the $185,000 has been recovered. (Here is a little trivia: it currently costs 7.7 cents to produce a nickel. Even the lowly penny is a loss leader, at 1.2 cents production cost.)

4. ASSISTANT CITY ATTORNEY PROTECTED FROM RETALIATION FOR REPRESENTATION OF CITY:

Having represented city in Equal Employment Opportunity Commission mediation in a manner that displeased opposing counsel, an assistant city attorney was terminated after that opposing counsel became mayor. Her suit under Title VII for alleged retaliation was successful. The mayor’s “immediate adviser exemption” defense fails, as, among other things, assistant city attorneys do not have a direct advisory relationship with the mayor. The question was one of the first impression: “whether a defense attorney representing an alleged violator of discrimination laws during an EEOC mediation qualifies as a protected participant under the Title VII participation clause.” The appellate court held that she does, as by representing the city in the mediation, she “participated” in a proceeding under Title VII. However, her “class of one” equal protection claim is foreclosed by a recent decision of the United States Supreme Court. Our colleague Chuck Carlson gets credit for summarizing the 41-page appellate decision. Kelley v. City of Albuquerque, Case Nos. 05-2309 and 05-2317 (U.S. 10th Cir., September 17, 2008).

5. THE FUNDING STATUS OF LOCALLY ADMINISTERED PENSION PLANS:

The Center for State and Local Government Excellence has released a new Issue Brief dealing with the funding status of locally administered pension plans. Are big city pensions and other locally administered pension plans in trouble? While state-administered plans are about as well funded as private sector plans, stories circulate about the perils facing Philadelphia, Omaha, Atlanta and other cities. To answer the question about locally administered pensions, the Center collected data on 84 plans from 38 states. The Brief describes the results of that survey, reporting the funding status of these locally administered plans and the extent to which their sponsors have a funding strategy and are sticking to it. The first section describes the sample. The second section compares the funding status of local plans to that of state plans. The third section reports on the factors that affect the level of funding among localities. The main finding is that the sample of locally administered plans, which includes plans from the above cities, has funding strategies that are as good or better than state plans, with a funding ratio of 85% compared to a state ratio of 84%. And when it comes to making their Annual Required Contribution, localities have a stronger record than states do: 69% make their ARC compared with 54% of the states.

6. MASS. HIGH COURT WILL DECIDE DISABILITY CASE:

The Supreme Judicial Court of Massachusetts will decide whether a former city worker qualified for a full disability retirement because she suffered a heart attack after being told her job was to be eliminated. According to salemnews.com, there are two legal questions: (1) whether Cole’s heart attack was sustained “as a result of and while in performance of her duties,” which would qualify her for full accidental disability retirement benefits and (2) whether the city is protected from having to pay benefits because it was simply conducting a legitimate personnel action. A trial judge ruled that Cole was entitled to the full pension (apparently applying the “presumption” designed for police officers and firefighters). In a rather unusual move -- at least to us -- the Supreme Judicial Court pulled the case from the Appeals Court, where a proper appeal was pending. A disability pension would amount to 72% of salary, rather than a service retirement at 60%. (Of course, the former could yield significant tax benefits under Section 104 of the Internal Revenue Code.)

7. NEW LAW TO ENSURE DEPENDENT STUDENTS WHO TAKE MEDICALLY NECESSARY LEAVE OF ABSENCE DO NOT LOSE HEALTH INSURANCE COVERAGE:

On October 9, 2008 President Bush signed H.R.2891. Dubbed “Michelle’s Law,” the law amends Employee Retirement Income Security Act of 1974, the Public Health Service Act and the Internal Revenue Code to ensure that dependent students who take a medically necessary leave of absence do not lose health insurance coverage. The law is effective for plan years beginning on or after October 9, 2009. The extension of coverage applies to a dependent child’s leave of absence from a postsecondary educational institution on account of serious illness or injury from which the child is suffering while covered under a health plan that would otherwise cause the child to lose dependent status for purposes of coverage. Coverage continues until the earlier of (1) one year from start of the medically necessary leave of absence or (2) the date on which coverage would otherwise terminate under terms of the health plan. The child must have been enrolled as a dependent under a health plan immediately before the medically necessary leave of absence involved. Written certification must be provided by a treating physician of the child. The health plan and its carrier must provide plain-language notification describing terms of the continued coverage now available. (We have also read reports of a new Florida law, effective October 1, 2008, that may allow certain children to stay on their parents’ health insurance until age 30. However, we have been unable to locate the actual statute. Chapter 2008-30 generally deals with the subject matter, but we do not find the extension to age 30 provision.)

8. GIVE THEM AN INCH AND THEY’LL TAKE A FOOT:

A Florida county firefighter accused of taking a crash victim’s foot has quit after telling investigators she would use the foot to train her cadaver dog. The firefighter trains cadaver dogs used to locate and follow the scent of decomposing human flesh, according to the Associated Press. An investigation into the incident reveals that the firefighter took the foot belonging to a car crash victim, and was storing it in her home freezer. It is fire department policy to take a severed body part with the patient to the hospital if there is any chance of reattachment, otherwise the body part goes to the medical examiner’s office. The 38-year-old firefighter, who was hired in 1994, abruptly resigned -- probably avoiding the boot. (We know the expression is “give them an inch and they’ll take a mile,” but that caption obviously would not work.)

9. ON DEVELOPMENT:

From Don’t Sweat the Small Stuff for Men: Just about every job includes some stress, plenty of hassles, trade-offs and things to complain about. But most jobs have at least some really nice perks that accompany the quirks. The question is, why do we so often zero in on the hassles and completely take for granted the parts of our jobs -- and lives -- that are really quite nice? The simple truth is, life is full of trade-offs. Just as some people pretend that everything is wonderful when it’s not, others act as though everything is terrible when it’s not. Put the quirks that come with the perks in perspective, and life will seem less stressful right away. Hmmm.

10. APHORISM:

How come it takes so little time for a child who is afraid of the dark to become a teenager who wants to stay out all night?

11. QUOTE OF THE WEEK:

“It’s a funny thing: the more I practice, the luckier I get.” Arnold Palmer


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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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