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Noncompliance with health care reform act could be costly

Business Insurance reports:

“Noncompliance of any provisions of this landmark health care reform, whether inadvertent or intentional, could be costly for employers, legal experts warn.

“One thing that the regulatory agencies have said is they’re not looking to penalize employers that are making a good-faith effort to implement the law. That being said, if your strategy is to not consciously implement on the hopes that this act is overturned or repealed, that is not acting in good faith,” said James Napoli, senior counsel at Proskauer Rose L.L.P. in Washington.

“What that means is, they would be subject to potential civil penalties through the Department of Labor. Second, they could be subject to the risk of litigation if a participant sues the employer for those coverages,” he said.“What makes it a little more scary is…under the act, there is a whistle-blower provision, which gives employees the opportunity to file a complaint with (the Occupational Safety and Health Administration) citing their employer, or plan fiduciaries’ unwillingness to provide mandated benefits,” Mr. Napoli said. “If there is a claim to be made there, the whistle-blower statute permits an award of special damages” which would be “in addition to the benefit that should have been provided under the plan.”This contrasts with penalties for violations of the Employee Retirement Income Security Act, which are limited to just the benefits owed, he said.Employers that attempt “workforce realignment,” such as cutting back on the hours worked by part-time employees to less than 30 so they are not subject to the requirement also could face litigation, Mr. Napoli said.“Say an employee who works 30 to 40 hours drops to 29 hours. That could be problematic unless there are other legitimate business reasons for making that move. ERISA prohibits employers from interfering with an individual’s right to a benefit. There’s a potential for whistle-blower claims, too,” he said.”

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