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What is ERISA and How Does It Affect Your Rights?

Posted Monday, January 8, 2018 by McKean J. Evans

If you have health plan or similar insurance through your employer, you may encounter the term “ERISA” in the context of your benefits. The upshot is ERISA is a federal law that regulates most employer-provided benefit plans, like health insurance, disability coverage or life insurance.

ERISA can be complex, but it also gives participants important rights, especially if participants dispute their benefit plan’s decision about coverage or benefits.

1. What is ERISA? Does ERISA Apply to My Benefits or Insurance?
ERISA is short for the Employee Retirement Income Security Act. ERISA is a federal law passed in 1974 that establishes minimum standards for employee benefit plans. ERISA was the result of the pension reform movement that gained momentum after the infamous 1963 Studebaker corporation shut-down in which nearly ten thousand workers suddenly lost their pension benefits.

Congress enacted ERISA to protect employees participating in employer-provided benefit plans. ERISA requires benefit plans to disclose important information to participants, establishes minimum standards for benefit plans, and allows participants to bring suit in federal court if their rights are violated.

There are some important exceptions, but the general rule is ERISA applies to most employer-provided benefit plans. That means if you receive benefits such as health, disability or life insurance through your employer, ERISA likely applies. ERISA can apply even if your employer contracts with a separate insurance company or other entity to provide benefits, so even if your plan documents identify an insurer other than your employer, ERISA may still apply.

2. What Are My Rights Under ERISA?
Among other things, ERISA provides participants two important rights. First, ERISA plan participants have the right to receive information about the benefits plan. For instance, ERISA requires that the administrator of a benefits plan provide employees with the documents describing the plan’s terms, such as a Summary Plan Description, insurance policies and similar documents, upon the participant’s written request. ERISA also requires plans to provide participants with information the plan relies on in deciding claims for benefits (e.g., deciding whether a health plan will pay for certain treatment). This is important if a participant disputes an ERISA plan’s benefits decision and wants to challenge it; for instance, a plan denying coverage for medical treatment because the plan’s doctor concludes the treatment is unnecessary would have to provide a copy of that doctor’s report.

Second, ERISA gives plan participants the right to sue in federal court. Plan participants can bring a lawsuit to either establish their right to benefits under an ERISA plan (e.g., to establish that their health plan covers certain treatment or that they are covered under a disability plan). Participants can also bring suit alleging that the people administering the plan breached their fiduciary duties or breached federal regulations requiring fair claims handling for ERISA plans. Importantly, plan participants who are successful in an ERISA lawsuit can recover attorneys’ fees, because Congress wanted to give plan participants easy access to lawyers to help vindicate their rights.

3. How Does ERISA Limit My Rights?
ERISA imposes important deadlines and other requirements with which participants must comply in order to protect their rights. One important rule is that participants must notify benefit plans of claims within certain deadlines, and must challenge to adverse benefit decisions (e.g., a benefit plan’s refusal to cover treatment or pay disability benefits) within certain deadlines. Failing to meet these deadlines can mean losing your right to challenge a plan’s incorrect decision to deny coverage. ERISA also requires participants who dispute a benefits plan’s decision to use the plan’s appeal process before filing suit in court. An important rule is that, generally, only information submitted as part of the appeal can be used as evidence in any later lawsuit. That means that participants who want to challenge their benefit plan’s decisions must be certain they follow the plan’s appeal procedures in order to protect their rights.

4. Where Can I Learn More?
If you have questions about your benefits under an ERISA plan, you may find it helpful to contact the administrator of your benefits plan and request the Summary Plan Description and other plan documents. Pursuant to ERISA, 29 USC § 1132, plan administrators must, upon request, provide participants with the plan documents within 30 days of a request.

If you have questions about ERISA generally, a potential resource is the U.S. Department of Labor’s Employee Benefits Security Administration, which has authority over ERISA plans. EBSA has an ERISA Frequently Asked Questions page here.

If you have questions about your legal rights under an ERISA benefits plan or a non-ERISA insurance policy, contact Pivotal Law Group attorney McKean J. Evans for a free consultation.

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Marijuana Retail License Rules Clarified, Confirms LLC’s Owner’s Spouse’s Homicide Conviction Precludes Marijuana License

Posted Wednesday, December 27, 2017 by McKean J. Evans

The Washington Supreme Court recently clarified the rules governing who may obtain a marijuana retail license. In Libby Haines-Marchel, et al. v. Washington State Liquor & Cannabis Board, the Supreme Court ruled that the Washington State Liquor and Cannabis Board (“WSLCB”) correctly denied a marijuana retail license requested by an LLC because one member’s spouse had prior criminal history. This case underscores the importance of careful compliance with the detailed WSLCB rules for marijuana retailers.

The WSLCB has discretion to grant or deny applications for marijuana licenses. When an entity applies for a marijuana license, all members of the entity must be qualified to obtain a license. The WSLCB may consider an applicant’s criminal history in deciding whether to grant the license. An applicant’s criminal convictions contribute “points,” and eight or more points disqualify an applicant from obtaining a marijuana license. Among other things, a felony conviction is 12 points.
In 2013, Rock Island Chronics LLC (“Rock Island”) applied with the WSLCB for a retail marijuana license. Rock Island’s application identified Libby Haines-Marchel as the sole owner of the company. The application also identified Haines-Marchel’s spouse as Brock Marchel.

Months after Rock Island submitted its application, Rock Island disclosed to the WSLCB that Brock Marchel was currently incarcerated on a 44 ½ year sentence for homicide. Libby Haines-Marchel provided WSLCB with Brock Marchel’s affidavit in which he gave up his ownership rights in Rock Island.

WSLCB denied Rock Island’s license, and Rock Island appealed. In court, Rock Island argued WSLCB’s denial of the license based on Rock Island’s owner’s spouse’s homicide conviction violated Libby Haines-Marchel’s fundamental right to marry and unconstitutionally deprived her of property.

After thoroughly reviewing Washington’s marijuana laws and retail license requirements, the Supreme Court sided with WSLCB and upheld the denial of Rock Island’s license. The court noted that not every state regulation incidentally relating to marriage impacts the fundamental right to marry, and found that denial of Rock Island’s license did not infringe on Libby Haines-Marchel’s right to marry because Washington has a legitimate interest in making sure that owners of marijuana retail companies are not disqualified by criminal history. The Court also found that Brock Marchel’s affidavit purportedly giving up his interest in Rock Island was legally ineffective because it was not a binding contract. Finally, the court ruled the denial of the license did not unconstitutionally deprive Libby Haines-Marchel of property because she had no property interest in the license – WSLCB had discretion whether to grant the license or not.

If you have questions regarding compliance with Washington’s marijuana retail laws, contact Pivotal Law Group attorney McKean J. Evans for a free consultation.

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Macy’s department store may not avoid liability for injuries caused by faulty escalator

Posted Wednesday, December 20, 2017 by Christopher L. Thayer

In Knutson v. Macy’s West Stores, Inc., et al, (75565-0-1)(December 11, 2017), the Court of Appeals Division I overturned a trial court ruling relating to a patron injured while riding on an escalator at the Bellevue Square Mall.

Natasha Knutson and her husband and daughter were leaving a holiday performance at the Bellevue Square Mall on December 6, 2012. They rode up an escalator located directly outside of a Macy’s department store. Knutson and her daughter were among seven persons physically injured when one of the escalator steps jammed. The escalator had several fail-safe mechanisms designed to shut it off in this situation, but due to poor maintenance, the fail-safes did not activate and the escalator continued to run. According to witnesses, there was a screeching noise, steps began piling up, and the escalator collapsed within itself.

The Department of Labor and Industries investigated the incident. An inspector found screws, bolts, and brackets loose on the skirt panel, which caused the panel to get in the way of the escalator steps. Schindler Elevator Company (who had a service contract to maintain the escalator) had failed to maintain proper maintenance logs and had not performed required maintenance for an extended period. The escalator had a history of mechanical issues such as vibrating, shaking, and emitting grinding sounds and smoke. The Inspector concluded a lack of maintenance and inaccurate escalator safety testing procedures led to the malfunction. An engineering firm hired by one of the defendants to conduct an independent investigation confirmed the Inspector’s opinions. An expert witness retained by the Knutsons, also concluded the accident was caused by Schindler’s failure to recognize obvious equipment defects that “would have been apparent to any reasonably trained escalator mechanic.”

Knutson sued Macy’s, Kemper Development Company and Bellevue Square, LLC (owners of the mall) for personal injuries. Macy’s in turn, sued Schindler – blaming it for the defective maintenance. The trial court dismissed the claims against Macy’s and Kemper, based on a defense neither had any notice of any defects or problems with the escalator prior to the incident, and they had delegated the maintenance to Schindler.

Escalators, like elevators, are known as “common carriers” and “A common carrier owes the highest degree of care toward its passengers commensurate with the practical operation of its services at the time and place in question.” Price v. Kitsap Transit, 125 Wn.2d 456, 465, 886 P.2d 556 (1994).

On appeal, the Court of Appeals shot down Macy’s and Kemper’s arguments:

Macy’s and Kemper contend they cannot be held vicariously liable for negligent maintenance by Schindler because Schindler was an independent contractor, not an employee. They are mistaken. Delegating maintenance to an independent contractor does not relieve owners and operators of escalators from the high degree of care they, as common carriers, owe to their passengers. Common carriers have historically been held vicariously liable for injuries to their passengers based upon a nondelegable duty of care. Niece v. Elmview Group Home, 131 Wn.2d 39, 54, 59, 929 P.2d 420 (1997), citing Marks v. Alaska S.S. Co., 71 Wash. 167, 127 P. 1101 (1912).

When a duty is nondelegable, “it cannot be satisfied merely by using due care in the selection of a contractor.” The Court of Appeals went on to note, “[a]n actor who owes a duty is permitted to delegate the activity to an independent contractor but will remain vicariously liable for the contractor’s tortious conduct in the course of carrying out the activity.”

The Court of Appeals also noted:

If Schindler’s neglectful maintenance caused the Knutson’s injuries, it is immaterial that Macy’s and Kemper were unaware of the loose screws and missing nuts. It is immaterial that escalator repair, by law, must be carried out by a licensed technician like Schindler. Macy’s and Kemper are vicariously liable for Schindler’s negligence the same as they would be if their own employees had been licensed to maintain the escalator and had been negligent in doing so.

Generally, an employer is not liable for the acts or omissions of an independent contractor. This case is a departure from that principle, though the Court based its ruling on the concept of “common carrier” liability, noting this duty was nondelegable. It should be noted, Schindler is still likely liable for the damages, and as of the date of the appeal, was the subject of a third-party claim by Macy’s.

This case has potential broad sweeping impact on commercial property owners and may well be appealed to the Washington Supreme Court. By this ruling, the court opened up commercial property owners to potential liability for actions (or non-actions) by professional licensed specialty contractors. Assuming this ruling stands, it will no doubt engender the parties to draft indemnity language and likely cross-insurance provisions in maintenance contractors for elevators and escalators. If you have any questions about this case or its implications, please contact Managing Member, Chris Thayer at (206) 805-1494 or CThayer@PivotalLawGroup.com.

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Washington Law Imposes Important Rules for Powers of Attorney

Posted Wednesday, December 13, 2017 by McKean J. Evans

What is a power of attorney? For many folks, a power of attorney, i.e., a legal document designating another person to act on your behalf as your “agent,” is a critical part of an estate plan or other legal arrangement. While it might seem straightforward to appoint a person to act on your behalf in case you become too ill or otherwise unable to manage your own affairs, this is not always the case. Washington law provides important rules governing powers of attorney that can make these documents more complex than might meet the eye.

First, to be valid in the first place, powers of attorney must follow certain formal requirements. The document must use the explicit term “power of attorney” and grant authority to an agent to act in the principal’s (i.e., your) place. The principal’s signature must be either notarized or witnessed by two unrelated persons who are not the principal’s home health or similar caregivers.

Unless otherwise provided, powers of attorney automatically take effect upon signing and automatically terminate upon death, revocation or divorce. Principals may detail specific circumstances (e.g., illness or incapacity) under which their power of attorney takes effect, and may even designate specific persons to determine when those circumstances are present.

Importantly, powers of attorney can grant broad powers to the agent by default simply by mentioning certain topics. For instance, powers of attorney mentioning real estate permit the agent to mortgage the property or remove buildings; references to financial institutions permit the agent to close accounts; references to businesses permit the agent to terminate the principal’s ownership or fire employees. A power of attorney may grant greater or more detailed powers than might appear at first blush.
Conversely, certain authority is presumed not to be granted to the agent unless the power of attorney explicitly provides as such. This includes important powers such as making gifts over the federal gift tax exclusion or making health care decisions.

Also important is that a power of attorney can implicate the principal’s will or other parts of their estate plan. Agents can often deviate from the principal’s estate plan if the agent does not know about the estate plan, or if the agent concludes the estate plan is not consistent with the principal’s best interest. This is especially important because the principal’s would-be heirs generally can’t sue the agent over changes to the principal’s estate plan.

Finally, a power of attorney can automatically terminate if a court appoints a legal guardian for the principal, which might occur if someone petitions the court claiming the principal can no longer manage their own affairs. This might alarm principals who execute a power of attorney because they desire certainty as to who will manage their affairs should they become incapacitated. Principals can maintain some certainty by nominating a prospective guardian in their power of attorney. The court appointing a guardian must appoint the principal’s nominee absent good cause.

If you have questions regarding a power of attorney or similar estate law matters, contact Pivotal Law Group attorneys Mike Larson or McKean Evans for a free consultation.

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Seattle Legislation Update – City Council To Vote On New Short-Term Rental Rules

Posted Wednesday, December 6, 2017 by McKean J. Evans

Owners and renters of properties used as short-term rentals (e.g., Airbnb) should be mindful of the Seattle city council’s imminent action on proposed new short-term rental rules. On Monday, December 11, 2017, the Seattle city council is expected to vote on a council committee’s approved proposed short-term rental regulations.

The proposed regulations are expected to tackle Seattle’s affordable housing crisis. Approximately 6,000 units in Seattle are currently used as short-term rentals. City council members have expressed an interest in preserving Seattle’s housing supply for local city dwellers. Some have contended that the rapid growth in the short-term rental industry depletes the local housing stock and drives up rents. The council previously passed legislation officially defining short-term rentals as specific units of housing offered for rent for fewer than 30 nights consecutively.

The proposed regulations would limit new renters to renting out their primary residence as well as one additional unit. Existing renters would be allowed to rent out two units, with the ability to add their primary residence as an additional short-term rental unit. Also, existing renters in specific locations such as downtown or South Lake Union, or renting older buildings in Capitol Hill, would be permitted to continue renting the properties they currently offer as short-term rentals.

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