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Cypen & Cypen
DECEMBER 31, 2003

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001

According to a lead article in the Daily Business Review, this year companies will spend a record $5 Billion in class action security settlements, led by Lucent’s $620 Million payout in September. However, as much as $1.8 Billion has not been claimed by institutional investors entitled to the money. Incredibly, two-thirds of pension plans, mutual funds and money managers do not file claims, contending the process is cumbersome and time-consuming! The one-third of investors that do collect benefit because size of the ultimate recovery is determined by dividing the number of claimants into the settlement. Apparently, this phenomenon is not new: between 2000 and 2002, institutional investors annually left about $1 Billion on the table, a little more than half of this year’s total. Trustees who fail to have their custodians or money managers file claims in their behalf should keep their fiduciary liability insurance policies handy. Clearly, trustees have a fiduciary duty to file all claims. It is impossible to tell what a claim is worth unless the claim is filed and processed.

In 1986, Congress passed the Consolidated Omnibus Budget Reconciliation Act. Although COBRA contained a wide variety of provisions affecting everything from agriculture to veterans’ programs, the statute has become best known for the provisions requiring group health plans to offer certain individuals who lose health coverage the opportunity to elect to continue such coverage for a limited period. COBRA implemented the continuation coverage requirements by simultaneously amending the Employee Retirement Income Security Act of 1974, the Internal Revenue Code and the Public Health Service Act. COBRA requirements under ERISA and the Internal Revenue Code, however, apply only to private sector employers. COBRA requirements under PHSA, on the other hand, apply only to certain public sector employers. A recent article in Employee Benefits Journal deals with the important distinctions between public and private sector COBRA. While many COBRA issues for state and local governmental plans can be handled in the same manner as they would be handled in the private sector, one should be alert for situations where these distinctions may need to be considered. Finally, the article examines two important areas that distinguish private and public sector COBRA -- enforcement and regulatory guidance.

Associated Press reports that the Chicago Police Department will offer a $250 bonus to motivate its officers to stay in shape. Like last year, the Department’s 13,500 officers were eligible for money if they volunteered for a physical fitness test. About 20% (2,750) took the test, with all but a handful passing. Actually, the test itself is not new: previously, the City rewarded officers with a pin, which was not much of an incentive as only about 350 a year took the test then. So, last year the $250 bonus was added, resulting in the greater test participation. To receive the bonus, an officer must run 1½ miles (no time specified), bench press most (how much?) of his body weight, do sit-ups (no number given) and demonstrate his flexibility (“I’d bend over backwards to get this bonus.”). Seriously, though, performance standards are based on age and gender.

According to the Associated Press, this thief is charmed, not armed. Hollywood, Florida, police say a bank robber has used his good manners to rob thousands of dollars, wishing tellers a Merry Christmas before he steals the money. Unarmed, he walks into a bank, approaches a teller and offers a warm greeting. Then he hands the teller a note, takes the cash, puts it in his own envelope and calmly leaves. He is suspected of hitting several banks in Broward County and Miami-Dade County over the past month. Captain Tony Rode, who happens to be a long-time Trustee on our client Hollywood Police Pension Board, says “notwithstanding his polite manners we consider him a dangerous felon.” Hopefully, he will soon be saying “thank you” to the jailers who lock him up.

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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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