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Cypen & Cypen
NEWSLETTER
for
JUNE 6, 2003

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001

1. UNDER ERISA, PLAN ADMINISTRATORS NOT OBLIGED TO ACCORD SPECIAL DEFERENCE TO TREATING PHYSICIANS:
The United States Supreme Court has issued an important ruling involving employee benefit plans covered by the Employee Retirement Income Security Act of 1974. Under a rule adopted by the Commissioner of Social Security, in determining whether a claimant is entitled to Social Security disability benefits, special weight is accorded opinions of the claimant’s treating physician. This case presented the question of whether a similar “treating physician rule” applies to disability determinations under employee benefit plans covered by ERISA. The court held that ERISA does not require plan administrators to accord special deference to the opinions of treating physicians. By accepting and codifying such a rule, the Commissioner of Social Security sought to serve the need for efficient administration of an obligatory, nationwide benefits program. In contrast, nothing in ERISA requires employers to establish employee benefit plans or mandates what kind of benefits employers must provide if they choose to have such a plan. Rather, employers have leeway to design disability and other welfare plans as they see fit. In determining entitlement to Social Security benefits, the adjudicator measures the claimant’s condition against a uniform set of federal criteria. Validity of a claim to benefits under an ERISA plan, on the other hand, is likely to turn, in large part, on the interpretation of terms in the plan at issue. ERISA is best served by preserving the greatest flexibility possible for operating claims processing systems consistent with a plan’s prudent administration. Plan administrators may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician. However, courts may not require administrators automatically to accord special weight to the opinions of the claimant’s physician, and courts may not impose on administrators a separate burden of explanation when they credit reliable evidence that conflicts with a treating physician’s evaluation. By extension, we believe this ruling has significance to local pension plans faced with disability determinations. The Black & Decker Disability Plan v. Nord, 16 Fla. L. Weekly Fed. S314 (U.S. May 27, 2003).

2. EMPLOYEES OF STATE MAY RECOVER MONEY DAMAGES FOR STATE’S FAILURE TO COMPLY WITH FAMILY-CARE PROVISION OF FMLA:
The United States Supreme Court has also issued an opinion interpreting the Family and Medical Leave Act of 1993. The FMLA entitles eligible employees to take up to 12 work weeks of unpaid leave annually for any of several reasons, including the onset of a “serious health condition” in an employee’s spouse, child or parent. The FMLA creates a private right of action to seek both equitable relief and money damages “against any employer (including a public agency) in any Federal or State court of competent jurisdiction,” should that employer “interfere with, restrain or deny the exercise of” FMLA rights. Congress may abrogate the States’ Eleventh Amendment immunity from suit in federal court if it makes its intention to abrogate unmistakably clear in the language of the statute and acts pursuant to a valid exercise of its power under §5 of the Fourteenth Amendment. Inasmuch as the FMLA satisfies the clear statement rule, State employees may recover money damages in federal court if the State fails to comply with the Family-Care provision of the FMLA. Nevada Department of Human Resources v. Hibbs, 16 Fla. L. Weekly Fed. S291 (U.S. May 27, 2003).

3. OFFICER ENTITLED TO QUALIFIED IMMUNITY WHERE STATEMENTS MADE DURING COERCIVE QUESTIONING OF SUSPECT WERE NOT USED AGAINST HIM:
In deciding whether an officer is entitled to qualified immunity, the court first determines whether the officer’s alleged conduct violated a constitutional right. If so, the court must determine whether the asserted right was “clearly established.” During an interrogation by Officer Chavez, Martinez admitted that he used heroin and had taken another officer’s gun during an altercation with police. However, Martinez was never given Miranda warnings. And although he was never charged with a crime, and his answers were not used against him in any criminal proceeding, Martinez filed a 42 U.S.C. §1983 suit, maintaining that Chavez’s actions violated his Fifth Amendment right not to be “compelled in any criminal case to be a witness against himself,” and his Fourteenth Amendment substantive due process right to be free from coercive questioning. The United States Supreme Court has held that a “criminal case” at the very least requires initiation of legal proceedings, and police questioning does not constitute such a case. Statements compelled by police interrogation may not be used against a defendant in a criminal case, but it is not until such use that the Self-Incrimination Clause is violated. Because Martinez was never made to be a “witness” against himself since his statements were never admitted as testimony against him in a criminal case, no constitutional right has been violated, and the officer is entitled to qualified immunity. It is not necessary to decide whether the asserted right was “clearly established.” Chavez v. Martinez, 16 Fla. L. Weekly Fed. S300 (U.S. May 27, 2003).

4. FIVE BUCKS NOW MAY MEAN BIG BUCKS LATER:
According to the Boston Globe, when Stoneham, Massachusetts, Town Meeting Moderator Michael Rotondi asked and received approval for a $5 hike in his yearly moderator’s salary last month he was seeking more than just a tiny pay raise. (Moderator, an elected position, may be peculiar to Massachusetts, but we’re guessing it’s something like a Council Chairman.) By boosting his annual pay to $205 -- that’s right, $205 -- Rotondi becomes eligible to enroll in the Town’s retirement system. He is given credit for all of his ten years as a Moderator, vesting him in the system and making him eligible for a pension and health care benefits at age 55. The pension benefit will be based on the average of his three highest-paying years. Thus, even though his moderator’s pay is minuscule, if Rotondi moves to a higher-paying Town job, the switch would boost his pension earnings and his pension. At least one Selectman (Commissioner/Council Member) complained that he was not aware of the retirement issue when Rotondi sought the raise; he assumed that the issue was only one involving a $5 increase in annual pay. Oh, why, you astutely ask does a measly $5 make a difference? Well, state law dictates that elected officials making more than $200 are eligible to enroll in a local retirement system.

5. FLORIDA RETIREES HAVE SAVED MORE AND ARE BETTER PREPARED FINANCIALLY THAN REST OF COUNTRY:
The American Savings Education Council has released its 2003 Florida Retirement Confidence Survey. Some of the key findings are

  • More than half of Florida retirees are very confident about having enough money to live comfortably throughout their retirement years (52% vs. 39% of American retirees in general). In contrast, fewer than three in ten Florida workers are very confident (27%).
  • Almost 6 in 10 Florida retirees are very confident they have enough money to take care of basic expenses in retirement (56%). In contrast, just one-third of Florida workers are very confident they will have enough money for basic expenses (34%).
  • More than half of Florida retirees are very confident they have done a good job of preparing for retirement (55%), but fewer than 3 in 10 Florida workers have this degree of confidence (28%).
  • Almost 8 in 10 Florida retirees have saved for retirement (78%, compared with 64% nationwide). About 7 in 10 Florida workers have ever saved for retirement (68%), and only 56% said they are currently saving.
  • Over 6 in 10 Florida retirees have savings and investments in addition to what they have set aside for retirement (61%), but just 53% of Florida workers have these additional savings.

One explanation why Florida retirees appear so much better prepared then retirees nationally is because the State’s warm climate and many amenities make it a magnet for older people with financial resources, which may act as “self-selecting” factors in attracting retired individuals who can afford to live there.

6. SEC ADOPTS FINAL RULE ON PROXY VOTING BY INVESTMENT ADVISERS:
On January 1, 2003 the U.S. Securities & Exchange Commission adopted a new Rule and Rule Amendments under the Investments Advisers Act of 1940. Effective March 10, 2003 (compliance date August 6, 2003), the new Rule and Rule Amendments address an investment adviser’s fiduciary obligation to its clients when the adviser has authority to vote their proxies. The new Rule requires an investment adviser that exercises voting authority over client proxies to adopt policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interests of clients, to disclose to clients information about those policies and procedures, and to disclose to clients the way to obtain information on how the adviser has voted their proxies. The Rule Amendments also require advisers to maintain certain records relating to proxy voting. The Rule and Rule Amendments are designed to ensure that advisers vote proxies in the best interest of their clients and provide clients with information about how their proxies are voted. Based upon our experience, all-but-the-smallest managers already have written proxy voting policies and procedures, describe them to clients, make them available to clients and inform clients how to obtain information on the way their securities were voted. The full text can be accessed at http://www.sec.gov/rules/final/ia-2106.htm.

7. REAL COP MISTAKEN FOR STRIPPER:
On the lighter side of things, we have this report from Associated Press. A Gainesville Police Officer arriving at a bachelorette party because of a noise complaint was mistaken as the entertainment. The partygoers thought the officer was a stripper, and didn’t realize he was legitimate until he drove away with the bride-to-be in handcuffs. They didn’t go so far as to try and grab him, but they were wondering when the show would start. In fact, as he was escorting the future bride to his car, the revelers said “okay, the warning has gone far enough, are you going to start stripping?” After issuing the standard-procedure noise warning, the officer also ran a warrants check on the would-be bride and found that the 24-year-old woman had an outstanding warrant for violation of probation involving a 2-year-old open-container citation, for which she had failed to pay $11. The woman was released on an $11 bond. Moral of the story: If you’re wanted, keep the music down.

Copyright, 1996-2004, all rights reserved.

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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