By David Majchrzak & Heather Linn Rosing

2023, Klinedinst Law.

The Honorable P. Kevin Castel of the United States District Court for the Southern District of New York recently commented as follows: “Technological advances are commonplace and there is nothing inherently improper about using a reliable artificial intelligence tool for assistance. But existing rules impose a gatekeeping role on attorneys to ensure the accuracy of their filings.” Indeed, one of the most common talking points about legal practice in 2023 has been the use of generative artificial intelligence. The concept has been part of several news stories, including allegations that some briefs created through the technology have incorporated citations to nonexistent cases, and courts have required lawyers attest either that their filings had human creators or at least human verification of the authorities relied upon. Like almost any relatively new technology, it is not surprising that its output is imperfect. But that does not mean lawyers cannot use such tools. Rather, it simply indicates that the appropriate care should be used that the lawyer is competent and maintains client confidentiality.

As memorialized in the recent comment [1] addition to Rule of Professional Conduct 1.1, a lawyer’s duty of competence includes “keep[ing] abreast of the changes in the law and its practice, including the benefits and risks associated with relevant technology.” This is a concept that applies not just to generative artificial intelligence, but any technology. A point that highlights why this is so significant is that one of the issues for a lawyer who found himself in the news based on his use of ChatGPT did not even realize the nature of the technology he was using; he believed it was just a search engine.

So, as an initial step, before relying on technology, lawyers should identify what it does, what its capabilities are, and what its limitations are. Particularly with a learning tool, keep in mind that it will likely not be updated to provide more recent information. For example, you well could see a prompt indicating that the tool cannot account for events that occurred within the past couple of years. For lawyers, that means that these tools may not have the most recent law. Accordingly, in addition to making sure that the cases these tools may use when generating some notes that the lawyer could use are actually real, lawyers should check to see whether the cases cited are still the most current on the topic.

Plus, because these tools learn from information that is posted elsewhere, it will only be as reliable as the source. Accordingly, it may be that the technology currently offers a great jumping off point. But there would be risks in not independently researching to verify and see whether there is anything more recent or conflicting with the authorities that the technology cites to.

Another potential risk of generative artificial intelligence is how it uses information. As the old Field Code provided and now the State Bar Act requires, California lawyers, of course, have the duty to “maintain inviolate the confidence, and at every peril to [themselves] to preserve the secrets, of [their] client[s].” That can be a unique challenge when using a large language model open platform, like generative artificial intelligence. That is, because of the inherent “learning” nature of the technology, information it accumulates could be stored and later accessed. So, lawyers using the technology should consider this before inputting information that could be sensitive if none. That could include, for example, clients’ names associated with their questions, or information that would cause a person familiar with the case to reasonably conclude the identity of the client and the events or situation described in the inquiry.

There have been a fair amount of comments and references to “robot lawyers” in recent vintage. But artificial intelligence is not designed to provide legal advice. Nothing can replace the knowledge that is learned regarding human nature from living. That is inevitably a crucial part of understanding any case, including how the parties got to where they are. And that informs what their needs are, whether in a transaction, in addressing regulation, or in resolving a dispute. The profession certainly has room for generative artificial intelligence as a tool. But lawyers should understand how and when it benefits their clients before employing it.



Maintaining Grandfathered Health Plan Status

Group health plan coverage that was in place on March 23, 2010 (the date that health care reform was enacted), and continuously thereafter are exempt from some health care mandates that otherwise apply to group health plans. This rule providing exemption is known as the “grandfather rule,” thus the plans are referred to as grandfathered health plans.

However, plans can permanently lose grandfathered status if certain coverage or design changes are made. As a result, employer-sponsors who wish to preserve a plan’s grandfathered status should understand the plan design changes that are permissible and must take care to avoid implementing any change that would cause an unintended loss of grandfathered status.

The Significance of Grandfathered Status
Grandfathered health plans are exempt from some, but not all, of the health care reform mandates. This includes the patient protection provisions; the appeals and external review processes; coverage of preventive health services and the ten categories of essential health benefits; and the guaranteed renewability and availability requirements. Importantly, other mandates apply regardless of a plan’s grandfathered status, which include the prohibitions on rescissions of coverage and annual and lifetime limits; the requirement to provide dependent coverage up to age 26; the 90-day limit on waiting periods; and the distribution requirement of Summaries of Benefits and Coverage (SBCs).

Because these plans remain subject to some health care reform mandates, the decision as to whether to maintain grandfathered status requires a cost-benefit analysis by the employer-sponsor on an ongoing basis. The advantages of avoiding the application of some mandates will need to be weighed against the considerable constraints that are placed upon the plan’s design and flexibility.

Plan Changes That Jeopardize Grandfathered Status
The regulations governing grandfathered health plans contain detailed rules regarding the plan design changes that will cause a loss of grandfathered status. Grandfathered status is lost as of the effective date of the impermissible plan design change and once lost, it cannot be regained.

  • (1) Elimination of Benefits
    The elimination of all or substantially all benefits under a plan to diagnose or treat a particular medical condition will cause a loss of grandfathered status. There is no clear rule for determining whether a plan has eliminated substantially all benefits to diagnose or treat a condition; rather, the determination is made based on facts and circumstances, with consideration to the coverage that was in place on March 23, 2010, as compared to the benefits that would be in place following the change.
    Changes in prescription drug formularies may constitute an impermissible elimination of benefits if the change eliminates drugs used to treat a particular medical condition.
  • (2) Any Increase in Percentage Cost-Sharing
    Any increase in percentage cost-sharing under the plan, such as an increase in coinsurance, will cause a loss of grandfathered status. The increase is measured from the cost-sharing in place as of March 23, 2010.
  • (3) Increase in Fixed-Amount Cost-Sharing
    Increases in fixed-amount cost-sharing, like deductibles and out-of-pocket limits, that exceed 15% above medical inflation will cause a loss of grandfathered status. Increases may be determined by reference to the greater of either: 1). The overall medical care component of the Consumer Price Index for All Urban Consumers published by the Department of Labor; or, 2). the most recent premium adjustment percentage published by the Department of Health and Human Services.
    Plans may make increases to fixed-amount cost-sharing that are necessary to maintain the plan’s high deductible (HDHP) status without jeopardizing grandfathered status.
  • (4) Decrease in Rate of Employer Contributions
    A decrease in the rate of employer contributions by more than five percentage points below the contribution rate in place on March 23, 2010, will cause a loss of grandfathered status. Changes to the rate of employer contributions may occur where the employer changes its contribution formula, or where the employer implements a wellness program or working-spouse carve-out that incorporates premium surcharges.
    Because any decrease in employer contributions is measured against the rate in place on March 23, 2010, an employer can decrease its contribution rate across multiple plan years so long as the cumulative reduction does not exceed five percentage points.

Changes that are not expressly prohibited by the regulations will not cause a loss of grandfathered status. Therefore, an employer-sponsor may make a change not listed here without impacting the grandfathered status of their plan.

Plan Changes in Response to the COVID-19 Emergency Period
Special guidance was provided to grandfathered health plans in light of the COVID-19 public health emergency. To the extent a group health plan added benefits, or reduced or eliminated cost-sharing, for COVID-19 diagnosis and treatment or for telehealth and other remote care services, its grandfathered status would not be jeopardized if these coverage changes are later reversed following the end of the emergency period. In other words, even though reversing these changes might ordinarily constitute an impermissible elimination of benefits or an increase in cost-sharing, it will not adversely affect a plan’s grandfathered status.
Preparing for the Loss of Grandfathered Status
There are many reasons why an employer-sponsor may choose to relinquish a health plan’s grandfathered status. For example, the costs of maintaining the employer contribution rates may become too high when faced with rising coverage costs, the employer may prefer to work with a third-party administrator that isn’t able to accommodate a grandfathered plan design, or the employer may be contemplating a business reorganization that will necessitate plan design changes.

Regardless of the rationale, employer-sponsors should prepare for the loss of grandfathered status to avoid unintended violations of health care reform mandates. Plan details should be reviewed to ensure adequate coverage for preventive care services and essential health benefits; plan documents, SPDs, and SBCs should be amended to reflect the effective date of the loss of grandfathered status; and any plan service providers, like claims administrators or other third-party administrators, should be promptly notified.

Click here to download a copy of this AHERN Benefits Brief.


*This Benefits Brief is not intended to be exhaustive, it is for informational purposes only and should not be considered legal or tax advice. A qualified attorney or other appropriate professional should be consulted on all legal compliance matters.

Additional Program Highlights:

  • Flat renewal for 1 year
  • Premium credits for members of the firm that are certified specialist
  • Claims expense outside of limit, 50% of per claim limit up to 1m
  • Automatic Renewal – no app
  • Topical risk management email plus annual webinar
  • Credits applied for claim free firms in addition no claims $10,000 or more incurred loss
  • Aggregate deductible available
  • Direct bill option of 4 payments (25% down) plan with no additional fees

We invite you to compare some of the program highlights below to your current carrier’s offering:

– A+ rated , one of the broadest policy forms in the market
– A flat premium renewal for the first year
– Premium credits applied to the entire firm based on your certified specialist designation
– Topical risk management emails plus an annual webinar at no cost
– Interest free direct bill option of 4 payments and 25% down
– No renewal application

Policy Specifics:

  • Selection of counsel endorsement for all firms
  • Individual Tail Option available anytime, flat $1,500 per attorney
  • 50% Reduced Deductible for settlement of claim within 30 days after Mediation (subject to $25,000 max)  – 5 ways to reduce deductible via collaborative defense – including usage of a properly executed engagement letter for the matter leading to the claim
  • Pre-Claim Expense
  • Prior Knowledge as of First Policy Issued by Insurer to Firm (instead of Inception of Current Policy)
  • Pro Bono Services – 25k First Dollar Defense , deductible applies after
  • Malicious Prosecution included within Personal Injury
  • Loss of Earnings Coverage ($500/$10,000/$50,000); Deductible does not apply
  • Disciplinary Proceedings $50k/$100k no deductible
  • Broad Definition of Professional Services, as Lawyer, Arbitrator, Mediator, Lobbyist, Notary Public, Title Agent, Administrator, Executor, Trustee, Publisher, Bar Board Member, etc.
  • Independent Contractors/Of Counsels covered
  • Tail Options 1, 2, 3, 6, unlimited
  • Free Retirement Tail after 3 years with Insurer and No Minimum Age Requirement
  • Individual Tail Option available anytime, flat $1,500 per attorney
  • Free Death/Disability Tail
  • Worldwide Territory (suit brought against insured in US, territories or possessions, Puerto Rico or Canada)
  • Spouse/Domestic Partner Coverage
  • Risk Management Hotline – staffed by AttPro risk management attorneys, not a 3rd party firm
  • Subpoena Assistance Coverage, up to $25k per policy, no deductible

Employers looking to lower their health plan costs have considered some strategies to reduce the number of participants. Among these strategies are spousal surcharges and carve-outs, which either impose an additional or increased employee contribution or restrict eligibility for spouses with access to a health plan through their employer. A more aggressive approach excludes spouses from enrolling in the plan altogether. These designs are also known as “working spouse provisions.” When one of these strategies is implemented, employers ultimately pay less in premiums (or claims for self-funded plans) than they would have if the spouses were enrolled. Employers considering one of these strategies must first consider the specific eligibility strategy they want to implement and the various federal and state law implications.

Spousal Eligibility Restrictions
Employers that don’t want to exclude spouses from their plan completely may choose to restrict their eligibility by imposing different strategies. One such strategy is a spousal carve-out. A spousal carve-out is a plan provision that excludes or restricts spouses from being eligible for the employer’s group health plan when they are eligible or enrolled in their own employer’s health plan.

Another approach to limit spousal eligibility in the plan is a spousal surcharge. A spousal surcharge is an additional or increased employee contribution amount when an employee enrolls a spouse that is eligible for coverage through their employer’s health plan.
A third, less aggressive approach employers may implement is allowing the spouse to enroll in the employee’s plan if they are also enrolled in their own employer plan (if applicable). In effect, the employer’s plan becomes a secondary payer to the spouse’s plan, potentially lowering costs for the employer.

Compliance Considerations
Whether an employer chooses the spousal surcharge or carve-out strategy, they must review the legal compliance considerations on their plans and prepare for any potential risks.

  •  ACA Pay or Play Rules. The ACA’s employer mandate does not require employers to offer coverage to spouses, so a spousal carve-out or surcharge is permitted. In some cases, these provisions can be beneficial for spouses. When spouses are ineligible, or the cost of the plan is too expensive, they could be eligible for a subsidy through the Exchange.
  • ACA Reporting. When the employer completes Form 1095-C, they must use either Code 1J (for plans that do not offer coverage to non-spouse dependents) or Code 1K (for plans that do offer coverage to non-spouse dependents) in Line 14 of the Form 1095-C to indicate that the employee’s spouse received a conditional offer of coverage.
  • ACA Grandfathered Plans. A spousal surcharge may cause a health plan to lose its grandfathered plan status.
  • State Laws. Many states have laws that prohibit discrimination based on marital status or sex. In addition, some states require specific spousal coverage. For self-insured plans subject to ERISA, such state laws will generally be preempted by ERISA, meaning that the state law will not prevent an ERISA plan from excluding spouses or imposing a surcharge. However, this won’t be the case for fully insured plans. If a plan is not subject to ERISA (such as church or government employers) or is fully insured, then ERISA will not offer any protection from applying state or local jurisdiction laws (e.g., statutes, regulations, and case law).
  • Medicare Secondary Payer (MSP) Rules. Employers should ensure that their plan’s eligibility restrictions apply uniformly to all participants. An employer who excludes Medicare-eligible spouses from the plan may violate the MSP rules, which prevents employers with 20 or more employees (including private and public sector employers and nonprofit organizations) from offering Medicare-eligible employees the same benefits as individuals under age 65.
  •  HIPAA Special Enrollment. If an employer implements a new spousal carve-out rule and an employee’s spouse becomes ineligible for the employer’s coverage, the loss of coverage for the spouse will trigger a HIPAA special enrollment and require the spouse’s employer to allow a special mid-year enrollment. However, the HIPAA special enrollment rules do not apply to a new spousal surcharge.
  • Section 125 Rules. Employers offering Section 125 Cafeteria Plans that offer pre-tax contributions for employees allow for midyear election changes for qualifying events in addition to HIPAA’s special enrollment periods. Since these events can vary from plan to plan, it could be difficult for a spouse to change their election with their employer’s plan. Also, employers should be cautious that their plan doesn’t run afoul of the Section 125 non-discrimination rules, which prevents employers from favoring highly compensated employees.
  • COBRA. Though the loss of coverage is a qualifying event under HIPAA special enrollment rules, the loss of eligibility due to a plan change (like a spousal carve-out) is not a COBRA qualifying event for the spouse. Although some employers may be tempted to offer COBRA in this situation, an insurance carrier or stop-loss provider might not provide coverage since it is not an actual COBRA event.
  • Plan Documents & Summary Plan Descriptions (SPDs). Employers implementing a spousal carve-out or surcharge must update their plan documents and SPDs to reflect the new rules clearly. Employers should also include any verification procedures and potential consequences. This information should also be included in all of their enrollment materials.

Other Considerations
In addition to the compliance considerations, employers should evaluate other potential issues and prepare proactively for them.

  • Employee Perception. Employers should be cautious of employee perception. In addition to being perceived as a benefit being taken away from them, adding a surcharge raises fairness issues for affected employees and could impact their “family-friendly” culture.
  • Eligibility Verification. How will employers verify eligibility status or when to include a surcharge? Will they use an attestation form or require documentation through the spouse’s employer? If an attestation form is used, they must decide if there will be any consequences to employees that do not answer truthfully or if the form is not received timely. Will it be required every year or only when the spouse’s circumstances change?
  • Exceptions. When designing the plan for a spousal carve-out or surcharge, employers should consider if they will allow any exceptions to the new rules (e.g., if a spouse works part-time, their employer’s plan is unaffordable, or when the plan offers less coverage).
  • Definition of Spouse. Employers must decide if the new rules will apply to domestic partners, civil union partners, common-law partners, surviving spouses, etc. Also, what is the impact (if any) on married employees working for the same employer?
  • Collective bargaining agreements (or other contractual obligations). Employers should review any collective bargaining agreements or other contractual obligations for potential conflicts if they decide to impose a change to spouse eligibility and employee contributions.
  • Insurance Carrier Rates. Using spousal surcharges and eligibility restrictions in an employer’s insured medical plan may affect the insurer’s underwriting assumptions and impact the plan’s premium rates. Employers must work with their carriers before changing their plan rules.

Employers looking to lower their health plan costs through a spousal surcharge or carve-out provision should work with their insurance agent, legal counsel, and tax advisor for a more detailed analysis of the impact on their health plan.

Click here to download a copy of this AHERN Benefits Brief.

It is my pleasure to extend to you a warm invitation to our upcoming virtual HR Leaders Compliance Summit (HRLCS 2023), which starts next Tuesday, March 7, 2023!

Over the course of this summit, you will hear from numerous subject matter experts that specialize in various HR-related disciplines covering topics ranging from labor & employment regulation updates, employee benefits trends, and human capital management best practices…all made infinitely more complex given today’s unprecedented times.  Each day is also pre-approved by SHRM/HRCI for 2 hours of continuing education (CE) credits.

We are also extremely excited to welcome Robin Arzón and Mike Abrashoff as our keynote speakers.  In addition to both being New York Times best-selling authors, Robin and Mike lend a valuable and unique series of insights to the challenges facing HR teams and their organizations today.  We are thrilled to have them participating in this year’s event!

For a full agenda overview, along with registration information, please visit the HRLCS 2023 event registration site.  When registering, please be sure to use our agency’s complimentary code of AIB to waive the admission cost.

We look forward to seeing you next week at HRLCS 2023!

November  2022

The reporting requirements under the Affordable Care Act (ACA) have been in effect since 2015. Many employers are already familiar with the rules. However, some employers, particularly those that have grown in size, may lack clarity regarding their reporting obligations under the law. As the deadlines for the 2022 ACA reporting roll near, it is important to review the basics of reporting, including any changes that may be applicable for the 2022 reporting year.

Basics of Reporting

The ACA created two federal reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056.

CODE SECTION 6055. Under Code Section 6055, insurance carriers and self-funded employers must report to the IRS and to covered individuals that the persons were covered by minimum essential coverage. These entities use Form 1094-B and Form 1095-B (B Forms) to report this information.

CODE SECTION 6056. Code Section 6056 applies to applicable large employers (ALEs)1 subject to the employer mandate or “pay or play” rules. ALEs must report information regarding their offer of health coverage to full-time employees by filing Form 1094-C and Form 1095-C (C Forms) with the IRS, and by distributing a copy of Form 1095-C to their full-time employees. The information on the forms will be used to determine whether the employer is subject to any pay or play penalties under Code §4980H. It will also be used to determine whether individuals are eligible for a premium tax credit on the Exchange.

Which Employers are Required to Report?

ALEs. Whether sponsoring a fully-insured or self-funded plan (see separate bullet for small, self-funded employers), employers who are ALEs must comply with the Section 6056 reporting requirements. To be considered an ALE for a calendar year, an employer must have employed, on average, at least 50 full-time employees including full-time equivalent employees during the previous calendar year. All types of employers can be ALEs, including tax-exempt organizations and government entities.

CONTROLLED GROUPS. All employees in a controlled group2 are counted when determining whether the employer is an ALE. If the combined total of all full-time and full-time equivalent employees of all employers within the controlled group meets the threshold, every employer in the controlled group is considered an ALE and is subject to Section 6056 reporting requirements.

SMALL, SELF-FUNDED EMPLOYERS. Small employers (i.e., non-ALEs) that sponsor a self-funded group health plan (including a level-funded health plan) must comply with the 6055 reporting requirements by using the B Forms. Note that ALEs that sponsor a self-funded health plan will comply with the reporting requirements under both Code Sections 6055 and 6056 by using the C Forms.

Reporting Forms

1094-B. This form acts as a transmittal form or cover sheet for Forms 1095-B to the IRS. The 1094-B requests only the following information: the filer’s name and address, EIN, information for an employer contact, total number of Forms 1095-B transmitted with the Form 1094-B, and a signature, title, and date. 1095-B. This form is used by insurers and small, self-funded employers to provide actual enrollment information of the individual and family members enrolled in minimum essential

1094-C. This acts as a transmittal form or cover sheet for Forms 1095-C, similar to a W3. Some information reported on this form includes the basic contact and identifying information of the employer, whether the employer offered minimum essential coverage to at least 95% of its full-time employees for each month of the calendar year, and the
total number of employees in each month.

1095-C. If you are an ALE (whether fully insured or self-funded), this form must be completed for every full-time employee, submitted to the IRS, and furnished to each employee. Large self-insured plans will also need to complete this form for any individual enrolled in coverage (i.e., part-time employees). This form requires the employer to detail its offer of coverage to the employee in order to avoid potential employer mandate penalties. As the IRS continues to assess Code 4980H penalties, it is critical to thoroughly check the coding of each employee on the form to make sure the information is correct and an accurate representation of each employee.

Deadlines for Filing

The due date for furnishing the 2022 Form 1095-B and 1095-C to individuals is March 2, 2023. Employers can deliver the forms to individuals by mail, in person, or electronically (with consent). The deadline for paper filing with the IRS is February 28, 2023 (March 31, 2023, if filing electronically). Electronic filing is mandatory if an employer is filing 250 or more Forms
1095-C and must be done via the ACA Information Returns (AIR) System. The IRS also has proposed regulations that would expand the electronic filing requirement to employers filing fewer than 250 forms. At the time, the rules have not been finalized, and the lower threshold is not included in the 2022 draft 1094-C and 1095-C instructions. While this lower threshold
is not likely to apply for the 2022 reporting in 2023, employers should review the final instructions upon release to ensure the rule has not changed.


If an employer fails to furnish the necessary forms to individuals or files incomplete or inaccurate ACA filing forms with the IRS, the IRS may impose penalties of up to $290 per form per failure for forms required to be filed or furnished in 2023. In past years, the IRS did not impose penalties for incomplete or inaccurate forms if the employer could show it made “good-faith efforts” to comply with the information reporting requirements (which requires the forms to be filed timely with the IRS). However, this relief was not extended for the 2022 forms due in 2023, so employers should no longer rely on this relief.

Employer Next Steps


COVERAGE. Confirm you offered minimum essential coverage that was affordable and provides minimum value to all full-time employees in 2022, and select the appropriate safe harbor used to determine the affordability of coverage.

FULLY INSURED. Avoid filing for non-full-time employees if not required (only required to report for non-full-time employees if they were enrolled in a self-insured health plan).

DOCUMENT RETENTION. Maintain records of hire and termination dates, along with documents substantiating compliance with the offer of coverage requirements (e.g. SBCs3, records of eligibility, election and waiver forms, etc.).

OUTSOURCED REPORTING. If working with an ACA reporting vendor or payroll provider, confirm that their system accommodates the updates made to the 2022 Forms. When transitioning to a new vendor or provider, it is critical to receive and maintain all records and data used to generate the past forms before terminating the contract.

STATE MANDATE. If your state has an individual mandate requirement, consult with your ACA reporting vendor to confirm that their system complies with the state’s filing requirements.


ELF-INSURED & LEVEL-FUNDED PLANS. If you sponsored a self-insured or level-funded group health plan in 2022, make arrangements to comply with the Section 6055 reporting requirements by completing the necessary B Forms.

EMPLOYEE COUNT. If you are close to the 50 full-time, including full-time equivalent, employee threshold, determine your future ALE status for 2023, so you can proactively prepare to meet the ALE reporting requirements the following year.

Additional Resources:


1094-C & 1095-C

1094-B & 1095-B




To Download a PDF version of this document, click here

HR Bulletin: Occupational Safety and Health Administration COVID-19 Vaccination Emergency Temporary Standard

The Occupational Safety and Health Administration (OSHA) has released the long-awaited emergency temporary standard (ETS) addressing mandatory vaccinations in the workplace.

UPDATE: On December 17, 2021, the Sixth Circuit Court of Appeals lifted the stay on OSHA’s 100+ Employee Vaccination and Testing Emergency Temporary Standard (ETS).  The court determined that the injuries claimed by the parties in opposition to the ETS were too speculative and the costs associated with delaying implementation of the ETS were too significant to uphold the stay.

As a result of the stay being lifted, OSHA made changes to the compliance deadlines previously in force.  Specifically, as long as an employer is exercising reasonable, good faith efforts to come into compliance with the ETS, OSHA will not issue citations for noncompliance with any requirements before January 10, 2022.  Further, they will not issue citations for noncompliance with the testing requirements before February 9, 2022.

The January 10, 2022 date is significant because the United States Supreme Court scheduled oral arguments for Friday, January 7, 2022 to determine if the ETS as well as the CMS Vaccine mandate should again be stayed pending full review of the merits of the litigation.  It is expected that due to the pressing nature of the issues, a decision by the Supreme Court will be issued shortly after oral arguments are complete, hopefully prior to the January 10, 2022 date set by OSHA for partial compliance with the ETS.

Employers that are covered by the ETS or the CMS Vaccine mandate should begin good faith compliance efforts in preparation for the upcoming decision by the Supreme Court.  A review of the key components of the ETS standards are contained in this publication and should be reviewed as a refresher for employers

Please click here to continue reading our AHERN Human Resources Bulletin.

Plan sponsors of group health plans providing prescription drug coverage to individuals who are eligible for Medicare Part D prescription drug coverage are required to satisfy certain notice requirements.

Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the prescription drug coverage is creditable.

The creditable coverage disclosure notice alerts individuals as to whether their plan’s prescription drug coverage is at least as good as the Medicare Part D coverage (in other words, whether their prescription drug coverage is “creditable”). Medicare beneficiaries who are not covered by creditable prescription drug coverage and who choose not to enroll in Medicare Part D before the end of their initial enrollment period will likely pay higher premiums if they enroll in Medicare Part D at a later date.

CMS has provided two model notices for employers to use:

Please click here to continue reading our AHERN Benefits Brief. This Benefits brief covers how to determine whether a prescription drug plan is creditable, notice requirements, whether there is a penalty for noncompliance, as well as CMS reporting.

By Daniel W. Hager

Corporate Counsel, Ahern Insurance Brokerage.

Written for 2021 issue of Arizona Attorney Magazine

Effective communication with clients is not only ethically required but it substantially reduces risk to lawyers.  A very large percentage of malpractice and ethics claims arise from poor communication.

Documenting advice to clients and their directions about the representation is not required by Arizona’s ethical rules in every situation.  There are exceptions, such as getting informed written consent in a conflict situation.  However, failing to document advice and client directions can substantially increase the risk of – and exacerbate – malpractice and ethical complaints.

ER 1.2 of the Arizona Rules of Professional Conduct require that “a lawyer shall abide by a client’s decisions concerning the objectives of representation and, as required by ER 1.4, shall consult with the client as to the means by which they are to be pursued.”

ER 1.4(a) requires that lawyers must “(1) promptly inform the client of any decision or circumstance with respect to which the client’s informed consent, as defined in ER 1.0(e), is required by these Rules; (2) reasonably consult with the client about the means by which the client’s objectives are to be accomplished; (3) keep the client reasonably informed about the status of the matter; (4) promptly comply with reasonable requests for information; and (5) consult with the client about any relevant limitation on the lawyer’s conduct when the lawyer knows that the client expects assistance not permitted by the Rules of Professional Conduct or other law.”

Lawyers may not take significant action without a client’s knowledge and consent, especially regarding settlement offers or other important decisions that must be made.  These rules require lawyers to generally abide by client decisions and to communicate effectively with clients.  They do not require that those client decisions and communications be documented in writing.  However, it is always the best practice to make a written record of such decisions by, and communications with, clients.

Particularly regarding major strategic decisions, settlements, and other important decisions that are not documented, if the matter ultimately goes badly for the client there is a significant risk that recollections may differ.  For example, a client may insist on a course of action the lawyer believes – and tells the client – will have adverse consequences for the client.  If those consequences come to pass – and the lawyer has not confirmed in writing the advice given, the client’s refusal to follow that advice, and the client’s insistence that another course be followed – the client may blame the lawyer for the bad outcome.  The client may even claim the lawyer decided the course to take without the client’s input or consent, or that the lawyer consciously refused to follow the client’s direction.

Without a writing memorializing the lawyer’s advice and the client’s directions, it becomes the lawyer’s word against the client’s in any later dispute.  Such “lawyer said/client said” situations increase the risk of bad outcomes in both ethics grievances and malpractice claims.

One effective way to communicate and document limits on a lawyer’s authority and obligations is to use written engagement agreements that clearly spell out the scope of the representation.  Equally importantly, they should specifically identify areas outside the scope of the representation, such as providing tax advice.  Well-drafted engagement agreements documenting the scope of the representation offer the additional benefit of the client having signed them as understood and agreed to.

Some clients may present situations where even carefully documenting important communications is not enough.  For example, a client may insist on taking actions the lawyer knows are criminal and seeks counsel’s advice on how to avoid being caught.  Or a client may direct the lawyer to take other unethical actions.  In such situations, documentation of communications is critical, but withdrawal from the representation altogether is the wisest course and may in fact be required under the applicable ethical rules.

Fortunately, most clients do not present such extreme situations.  But for any client, the lawyer is well-advised to memorialize or confirm all important client decisions and communications in writing.  Some situations may require a lengthy letter or memo to the file.  In other situations, a brief email confirming the client’s direction or consent to take a particular action is sufficient.  The key is to memorialize such important communications in writing.

Good communication with clients generally, and about major decisions in particular, will greatly reduce the risk of ethics grievances and malpractice claims.  Creating a written record of those communications provides lawyers with a critical additional layer of protection.

Many in-house attorneys fail to purchase Employed Professional Liability Coverage to protect themselves against potential lawsuits. Even though most claims are brought on by clients, employed lawyers are also subject to suits from third parties, such as employees, shareholders and government agencies. It is imperative that a successful organization and its legal staff recognize their real legal risks and then purchase coverage to protect against those risks.

Risks Facing In-House AttorneysThe following are just some of the many risks that in-house attorneys regularly face:

  • Attorneys at private companies face exposures when performing contract negotiations, giving advice to Human Resources professionals, assisting with mergers and reviewing contractual language.
  • For public companies, Sarbanes-Oxley (SOX) increases potential exposure—for publicly-traded companies only.
  • Since electronic information is discoverable and recoverable, it must be stored and preserved just like paper documents once were. In-house attorneys should work with IT professionals to ensure compliance with this rule.
  • Clients may sue over a contract that did not work in their favor in which the attorney had a hand in writing.
  • Termed employees may sue the employer and name the attorney for negligence.
  • Attorneys are at risk when performing moonlighting services or pro-bono work.

Insurance Protection— To protect against these risks, it is wise to purchase Employed Lawyers’ Professional Liability Insurance coverage, [Employed Lawyers Coverage]. Typical policies may feature the following:

  • Protection from demands, suits or proceedings for damages or injunctive relief
  • Policy may be written as either a “claims made” or “claims made and reported,” and a “duty to defend” or “non-duty to defend” basis
  • Responds to licensing proceedings for in-house attorneys to practice law
  • Deals with compliance for SOX
  • Provides defense against claims alleging wrongful acts
  • Wrongful acts and claim definitions are expanded and broad
  • Extends to pro-bono or moonlighting work done by in-house lawyers
  • Includes full-time on-staff attorneys and contract and independent contract lawyers and support staff members
  • Advance of defense costs, even if allegations are found to be groundless
  • Coverage extends globally
  • Coverage for non-client claims
  • Coverage for SEC and regulatory claims
  • Punitive damages coverage
  • Covers claims from coworkers that arise out of the attorney’s work at the organization
  • Covers costs for claims brought by the employer, board of directors and officers

In-house counsel should make sure they are protecting themselves from risk while they work to protect their employer from risk. Contact AHERN Insurance Brokerage to learn all about our insurance solutions for your business today. Based in San Diego, also serving the San Francisco and Los Angeles areas.


This Coverage Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.  © 2011 Zywave, Inc. All rights reserved.