Elizabeth Engert Manzo Archives — Lindabury, McCormick, Estabrook & Cooper, P.C. Firm News & Events

Crisis Management: Safeguards to Protect Against Financial Elder Fraud

Published on: April 15, 2024 | by Elizabeth Engert Manzo

In an era where digital transactions are becoming increasingly prevalent, the mechanisms by which financial institutions inform customers of potential fraudulent activities are under scrutiny. Recently proposed revisions seek not only to bolster security measures but also to ensure that customers are promptly and clearly notified, thus minimizing the risk of financial loss.

Possible Changes to Bank’s Notice of Suspected Fraud Under Review

On the first day of the 2024 New Jersey legislative session, Assembly Bill No. 1832 was introduced and referred to committee. If approved as enacted, A1832 would require financial institutions to release financial records to adult protective services if there is suspected fraud of a vulnerable adult or senior customer. It would also permit adult protective services to release these records to law enforcement, where necessary.

Can a Last Will and Testament Require that Beneficiaries Arbitrate their Disputes?: In a case of First Impression, New Jersey Court says No.

Published on: October 18, 2022 | by Elizabeth Engert Manzo

Whether a Testator can compel beneficiaries of an Estate to arbitrate potential disputes regarding the enforcement, interpretation, and administration of a Last Will and Testament by including a mandatory arbitration provision is a novel legal issue which, until recently, had not been considered by the courts in New Jersey. For those hoping that an arbitration provision could be used when drafting a Last Will and Testament to bar litigation in court and thereby reduce the possible time and expense of estate disputes, a recent New Jersey decision dashed such hopes and held that arbitration provisions in a will are unenforceable.

In the case of In Re Estate of Hekemian, the plaintiff, Richard E. Hekemian, one of the Decedent’s four sons and a beneficiary of his Estate, filed a lawsuit seeking compensation from two of his brothers, Peter S. Hekemian and Edward G. Imperatore, in their capacities as Co-Executors of their late father’s Estate. Upon notice of the litigation, the defendants filed a motion to compel arbitration based on an arbitration provision in the Decedent’s Will. In turn, the plaintiff opposed the motion claiming that the arbitration provision in the will is invalid under New Jersey.

While noting that the State of New Jersey, as a matter of public policy, generally favors arbitration as a dispute resolution mechanism, the New Jersey Superior Court determined that an arbitration provision in a Decedent’s Last Will and Testament was unenforceable. The court began its analysis by noting the hallmark principle that a testator’s intent should be honored and upheld. To wit, the court cited to the statute at N.J.S.A. 3B:3-33.1 which states that “the intention of a testator as expressed in his will controls the legal effects of his dispositions”.

Disability Planning with ABLE Accounts Made More Attractive in 2022

Published on: February 22, 2022 | by Elizabeth Engert Manzo

While many may be familiar with Special Needs Trusts, some are still not familiar with tax-free Achieving a Better Life Experience (ABLE) savings accounts which were created under a 2014 federal law and currently available in New Jersey (and 46 other states). Funded correctly, ABLE accounts permit disabled individuals and their families to save money for disability-related expenses without compromising eligibility for needs-based benefits such as SSI, Medicaid, and other education, housing, health and food stamp benefits (such as FAFSA and SNAP). To establish an account, the designated beneficiary (and owner) of an ABLE account must be legally blind or have a medical disability that occurred prior to age 26. While interest earned on the account is tax-free, ABLE accounts with assets up to and including $100,000 are disregarded as a resource for SSI purposes. Distributions from the ABLE account may be made only to or for the benefit of the disabled individual for “qualified disability expenses,” which broadly include education, housing, transportation, assistive technology, health and wellness, legal and funeral expenses, etc. Starting in 2022, and for the first time in four years, annual contributions to an ABLE account increased to $16,000 (matching the 2022 annual gift tax exclusion amount). While ABLE account balances are subject to Medicaid estate recovery upon the death of the disabled beneficiary, in certain disability planning circumstances the utilization of an ABLE account, either alone or in conjunction with a Special Needs Trust, may be an integral part of smart disability planning.

U.S. Supreme Court Issues Opinion on ERISA Breach of Fiduciary Duty

Published on: February 15, 2022 | by James K. Estabrook and Elizabeth Engert Manzo

On Monday, Jan. 24, 2022, in the case Hughes vs. Northwestern, the U.S. Supreme Court ruled that a fiduciary’s duty to monitor investments in defined contribution retirement plans means the plan cannot include non-prudent investments. In reaching this conclusion, the Court recognized that fiduciaries have an ongoing obligation to monitor plan investments. Simply offering participants a diverse menu of investment options is not sufficient to insulate fiduciaries from potential liability.

The Holding in Hughes v. Northwestern.

In Hughes, employees of Northwestern University participated in two defined contribution 401(k) plans offered by the University. The employees alleged that the trustees of the plans breached their fiduciary duty to the participants by “(1) failing to monitor and control recordkeeping fees, resulting in unreasonably high costs to plan participants; (2) offering mutual funds and annuities in the form of “retail” share classes that carried higher fees than those charged for otherwise identical share classes (institutional share class) of the same investments; and (3) offering investment options that were likely to confuse investors.” Both the trial court and the Seventh Circuit Court of Appeals accepted Northwestern’s argument that even if some options were not prudent, there was no violation of ERISA’s prudence standard because the plans offered a diverse menu of investment options that the plaintiffs agreed were prudent.

SCOTUS Blocks OSHA Vaccination Mandate for Small Employers but Upholds CMS Mandate for Healthcare Facilities

Published on: January 14, 2022 | by James K. Estabrook, Elizabeth Engert Manzo and Kathleen M. Connelly

On November 4, 2021, the Occupational Safety and Health Administration (OSHA) issued an Emergency Temporary Standard (ETS) requiring employers of 100 or more to adopt COVID-19 policies, maintain rosters of vaccinated employees, and provide paid time off to employees to vaccinate or recover from its effect. These mandates were to go into effect on January 10, 2022. By February 9, 2022, employers were to require employees to show proof of COVID-19 vaccination or undergo weekly testing.

On that same date the Centers for Medicare & Medicaid Services (CMS) issued an interim rule mandating COVID-19 vaccination and other requirements for workers in most healthcare settings participating in Medicare and Medicaid programs by January 22, 2022.

Legal challenges quickly wound their way through the federal courts, leaving businesses in limbo about their obligations to implement these vaccination and testing mandates. On January 13, 2022 the Supreme Court of the United States (SCOTUS) issued decisions on both mandates, imposing a stay on the OSHA ETS vaccination and testing mandates, but upholding the vaccination mandate and other aspects of the CMS for healthcare facilities.

Zero Tolerance Policy? Not So Fast. Proposed Cannabis bill offers Clarification and Possible Relief to Some Employers.

Published on: March 18, 2021 | by Elizabeth Engert Manzo

After much anticipation, New Jersey’s Governor Murphy signed the “New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” into law on February 22, 2021. While this law made adult use recreational cannabis legal, the extensive law, together with a few “clean up bills,” did a whole lot more than legalization. In hundreds of pages, this law created the broad framework for the development and regulation of the entire cannabis industry including licensing, manufacture, distribution, taxation, enforcement, as well as criminal and social justice reforms for the possession and use of cannabis. It is therefore not surprising that some issues of particular importance to employers, such as drug testing and carve-outs for certain industries, are still hazy.

Importantly, while some provisions of the law became effective immediately, the provisions governing employment and those “activities associated with the personal use of cannabis,” are not operative until the newly appointed five member Cannabis Regulatory Commission adopts initial rules and regulations. These regulations, which will interpret and instruct how the law will be implemented, are required sometime within 180 days of the law’s adoption, or by mid-August 2021.

How does recreational marijuana impact Zero Tolerance Marijuana Policies?

Adult Use Recreational Marijuana May Soon Be Legal, but Employers in New Jersey Are Left in the Dark

Published on: January 8, 2021 | by Elizabeth Engert Manzo

In November 2020, by a vote of 67.08% to 32.92%, the voters of New Jersey passed a ballot measure to amend New Jersey’s Constitution to make use of recreational marijuana by those over age 21 legal in New Jersey beginning on January 1, 2021. However, until legislation is signed by the Governor and rules and regulations are issued by the Commission, the details on legalization and the cannabis industry rollout are hazy. And, what may be worse for New Jersey employers, is the considerable uncertainty regarding how they can maintain a drug free workplace.

When will recreational marijuana become legal?

With voter approval to legalize weed, it is clear that there exists considerable pressure to quickly pass legislation which explains how New Jersey’s recreational marijuana program will roll out. And while some might suggest that recreational marijuana became legal in New Jersey on January 1, 2021, because the ballot measure contemplated a highly regulated and taxed recreational cannabis market, most agree that recreational marijuana is not, in fact, legal until New Jersey’s recreational marijuana law and regulations are enacted.

Final “Transparency Rule” Issued for Group Health Plans and Insurers

Published on: November 30, 2020 | by James K. Estabrook and Elizabeth Engert Manzo

On October 29, 2020, the Department of Health and Human Services (“HHS”), the Department of Labor (“DOL”), and Department of Treasury (“DOT”) collaborated to issue a final “transparency rule” aimed at providing greater information to consumers, thereby allowing them to explore different healthcare options and avoid surprise billing for services rendered. Additionally, the rule requires the public disclosure of negotiated rates for in-network providers and amounts allowed for out-of-network providers.

Disclosure of Provider Rates

Under the rule, non-grandfathered health plans and insurers must publish their negotiated rates and allowable out-of-network charges on a public website, which is to be updated monthly through three machine-readable files. The website must be publicly available, accessible without charge, and cannot require a user account, password, or other credentials, or submission of personally identifiable information to access the files. Specifically, the files will reflect negotiated rates for in-network services, historical payments to and billed charges from out-of-network providers, and in-network negotiated rates. The files must also show historical net prices for covered prescription drugs at the pharmacy level.

IRS Announces Additional Guidance for Coronavirus-Related Distributions and Loans

Published on: June 29, 2020 | by James K. Estabrook and Elizabeth Engert Manzo

On June 19, 2020, the IRS released Notice 2020-50, which provides additional guidance and relief for retirement plan participants taking coronavirus-related distributions and loans under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Under the CARES Act, “qualified individuals” may take coronavirus-related distributions of up to $100,000 from their eligible retirement plans without being subject to the 10% additional tax on early distributions. In addition, a coronavirus-related distribution can be included in income ratably over the three-year period commencing with the year of distribution and the individual taking the distribution has three years to repay the distribution to the plan, or roll it over to an Individual Retirement Account (“IRA”) or other qualified retirement plan, with the effect of reversing the income tax consequences of the distribution. In addition, the CARES Act allows plans to suspend loan repayments due from March 27, 2020 through December 31, 2020 and further allows for an increase in the dollar amount on loans made between March 27, 2020 and September 22, 2020 from $50,000 to $100,000. Notice 2020-50 expands the definition of qualified individuals under the Act and provides additional, clarifying guidance regarding coronavirus-related distributions and loans.

Expansion of the Definition of “Qualified Individual”

Under the original language of the CARES Act, a qualified individual included the following persons:

The DOL Issues New Rule Regarding Electronic Disclosure Safe Harbor for Retirement Plans

Published on: May 28, 2020 | by James K. Estabrook and Elizabeth Engert Manzo

On May 21, 2020, the U.S. Department of Labor (“DOL”) announced a final rule allowing employers to post retirement plan disclosures online or furnish them to workers via email. The rule is aimed at reducing administrative expenses for employers and making information more readily available to workers.

ERISA-covered retirement plans must furnish multiple disclosures each year to participants and beneficiaries. The exact number of disclosures per year depends on the specific type of retirement plan, its features, and in some cases the plan’s funding status. To deliver these disclosures electronically, plan administrators were previously required to comply with the regulatory safe harbor established in 2002 under 29 CFR 2520.104b-1(c), which required that disclosures be reasonably calculated to ensure that workers actually received the information, including confirmation that the transmitted information was actually received (e.g., using return-receipt or notice of undelivered electronic mail features, conducting periodic reviews or surveys to confirm receipt of the transmitted information).

On August 31, 2018, Executive Order 13847, entitled Strengthening Retirement Security in America, was issued. The Order directed the DOL to review whether regulatory or other actions could be taken to make retirement plan disclosures more understandable for participants and beneficiaries and to focus on reducing the production and distribution costs that retirement plan disclosures impose on employers. In October 2019, the Department published a proposed regulation with a solicitation for public comment. In response to the commentary received, a final rule creating a new voluntary safe harbor was established. The new safe harbor permits the following two optional methods for electronic delivery: