The Internal Revenue Service has issued new regulations clarifying certain requirements for continued group health plan coverage under COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985). COBRA requires that qualified employees be given an opportunity to choose to continue their health care coverage after separation from their employer under certain conditions.
The regulations prevent group health plans from terminating COBRA continuation coverage because a qualified beneficiary had other coverage prior to electing COBRA coverage. They also eliminate the requirement that group health plans offer qualified beneficiaries the option to choose only core coverage under a group health plan that otherwise provides both core and noncore coverage.
Employers and employee organizations have increased flexibility in determining, for purposes of COBRA, the number of group health plans they maintain. They give employers new options in counting employees to determine eligibility for the small-employer plan exception and limit the application of COBRA for most health flexible spending arrangements.
The regulations also include rules for determining COBRA liabilities during a sale or reorganization.
While they give businesses more flexibility in structuring their group health plans, the new rules also expand COBRA coverage. Given their complexity, businesses should consult with employee benefits specialists to determine their impact.
Paul M. Yenerall
Repair clause reverberations
Businesses should pay closer attention to repair and maintenance clauses in leases, since such responsibilities tend to be among the lease provisions that most often lead to disputes.
Except in long-term leases for stand-alone buildings, the landlord is generally responsible for structural repairs, while the tenant is responsible for day-to-day maintenance and upkeep.
Businesses should negotiate leases that require the landlord to pay as much as possible of the costs to fix or replace big-ticket items such as plumbing, HVAC, and electrical systems.
Another provision to look out for is compliance with laws. Its important to specify that this provision not be interpreted to require the tenant to make changes to the premises to comply with such laws. Otherwise, a business might find itself forced to install sprinklers to comply with fire code amendments or pay for changes to comply with the Americans with Disabilities Act or other future legislation.
When Web banner ads infringe
Two recent lawsuits, if successful, may result in new rules for Internet advertising and commerce that will affect businesses selling through e-commerce.
Estee Lauder, the major fragrance and cosmetic retailer, is suing the Internet portal Excite for trademark infringement on grounds that Excite sold Estee Lauder and Origins, key words trademarked by Estee Lauder, to a retailer without its consent. As a result, when a user searches the Web on the basis of those key words, banner ads appear for the retailer that bought the key words, even though it isnt authorized to sell Estee Lauder products.
Playboy Enterprises has filed a similar suit against Netscape Communications and Excite to prevent banner ads for non-Playboy sites from appearing when surfers search the Web using keywords playboy or playmate.
To protect brands and trademarks, periodically monitor your Web sites and the ads that appear.
Law Briefs is compiled by attorneys from Eckert, Seamans, Cherin and Mellott, a national law firm based in Pittsburgh.