Stephen H. Cypen, Esq., Editor

1. “FIREFIGHTER’S PRESUMPTION” DIFFICULT TO REBUT:

Punsky sought appellate review of an order of the Judge of Compensation Claims denying workers’ compensation benefits. Punsky, who was employed as a deputy sheriff, had a heart attack while sleeping. Following denial of workers’ compensation benefits by his employer, Punsky petitioned for benefits based on allegations that stress from his job as a police officer had caused the heart attack. He sought to invoke Section 112.18, Florida Statutes, commonly referred to as the “Firefighter’s Presumption,” the effect of which entitles law enforcement officers who have heart attacks (with no apparent non-occupational cause) to workers’ compensation benefits. If a claimant demonstrates that the presumption applies, the employer must rebut or overcome the presumption. The Judge of Compensation Claims ruled that the presumption did not apply (because Punsky “failed” his pre-employment physical) and that, in any event, the employer rebutted the presumption by presenting evidence of a pre-existing condition and other risk factors. In reversing, the appellate court held the presumption did apply, and was not overcome by the employer. First, all three doctors who testified at the hearing agreed that the pre-employment physical showed no evidence of heart disease, and the doctor who administered the exam concluded at the time that claimant had “passed.” Second, the employer did not meet its burden to rebut the presumption because it failed to provide evidence of a specific non-occupational cause of Punsky’s heart disease. Here, the court cited the Florida Supreme Court’s 1979 Caldwell decision (in which 30 years ago we filed an amici curiae brief in support of Caldwell). The employer’s experts’ testimony that Punsky would have had a heart attack no matter what job he was employed in shows only that they believed the heart attack, and, by inference, the underlying heart disease, were not caused by the job, not that there was another specific identifiable cause. Such testimony does not rebut the presumption. While the employer’s experts did give various opinions as to the risk factors appearing from Punsky’s medical history (one of which was his pre-existing condition), risk factors do not amount to causation. Thus, the court distinguished an earlier one of its decisions in which it held that benefits were properly denied where a claimant’s disability was the “natural progression” of, or was “caused” by, a congenital heart disease. Because the employer failed to present evidence of a specific cause of Punsky’s heart disease, the presumption had not been overcome and Punsky was entitled to relief. Punsky v. Clay County Sheriff’s Office, 33 Fla. L. Weekly D1820 (Fla. 1st DCA, July 21, 2008).

2. SECURITIES LENDING ISSUES:

Following the markets, securities lending has been on its own wild ride, though a more pleasant one. According to plansponsor.com, beginning in the second half of last year, as the crisis in the credit markets deepened, the markets themselves experienced dislocations. Uncertainty led to volatility and equity market declines, so investors looked to securities lending to generate alpha and returns, increasing fees for agents/lenders. Securities lending fees were positive in an otherwise negative outlook for banks the first quarter of this year. However, turbulent markets are not all cozy for securities lending: market gyrations also laid bare security lending risks, leading many lenders to reevaluate their programs. Plan sponsors generally have viewed securities lending and reinvesting cash collateral as fairly low risk. But recent events led sponsors to reevaluate risks and make changes to their programs. One risk discovered was potential losses on reinvestments of cash collateral that did not perform as expected. In some cases, sponsors did not have enough to repay the collateral at termination of the loan period. Other plan sponsors had collateral reinvested in investments whose credit quality deteriorated. Reinvestment losses (and reports of them) led lenders to reevaluate the risks they assume on their securities lending programs. The ultimate concern of the plan sponsor is that this credit deterioration not lead to insufficient funds to pay back collateral on the loan. As a result, securities lenders are reviewing investment guidelines for cash collateral, and making changes. In addition, clients are shortening final maturity of authorized investments and increasing minimum credit rating they will permit. Finally, there is now a fairly significant demand from the broker/dealer community for noncash collateral. Currently, typically 85% of lending transactions involve cash collateral. Those-in-the-know predict that, going forward, the trend will be 50% cash and 50% noncash collateral.

3. FEDERAL MINIMUM WAGE RISES:

Today the second of three $.70 Federal Minimum Wage hikes takes effect, bringing the new Federal Minimum Wage to $6.55 per hour. In Florida, the minimum wage is $6.79 per hour ($3.77 per hour for tipped employees), as of January 1, 2008. Workers in Florida should receive the higher state wage, which, incidentally, is adjusted annually for inflation by the Florida Agency for Workforce Innovation.

4. BLACK COPS WILL SHARE $2 MILLION SETTLEMENT:

Five high-ranking black police officers will share $2 Million in a proposed settlement of their lawsuit alleging a long history of discrimination against black officers in the Minneapolis Police Department, according to startribune.com. The suit is among a number of disputes that highlighted racial divisions in the police department and intensified criticism from the community. If approved by the Minneapolis City Council tomorrow, the proposed agreement could help ease those tensions, which have simmered for a year and a half. The settlement would involve a payment to the officers and creation of a unit headed by a deputy chief to oversee diversity and race issues.

5. TEN THINGS YOU MAY NOT KNOW ABOUT YOUR PERSONAL FINANCES:

Not from David Letterman, but from USA Today, we have a list of things people may not know about their personal financial situation:

1. Medicare does not cover nursing home care. Nearly 60% of Americans think Medicare pays for nursing care, and 52% assume that it covers assisted living. Medicare will cover only part of the cost of a skilled nursing facility while you recover from an injury or illness (not to exceed 100 days). Medicare does not cover any costs of a nursing home.

2. The way banks process checks and debit-card transactions can cost you big-time. Banks tend to process transactions from the largest to the smallest dollar amount, rather than in the order received. This policy is another way for banks to boost profits, because processing first high, then low, dollar amounts enables banks to hit customers with multiple overdraft fees.

3. Once you turn 50, you can put away more pretax money for retirement than younger workers can. Many older workers fail to exploit the 401(k) “catch-up” rule, which lets people 50 and older contribute an additional $5,000 a year to their 401(k) accounts.

4. If you did not get a tax rebate this year, you might be able to claim it when you file your 2008 tax return. Millions of taxpayers have received, or will receive, rebates. Many others, however, will get a reduced amount, or none at all, because their 2007 income was too high. (Congress phased out rebates for single taxpayers with adjusted gross incomes of more than $75,000 and married taxpayers with more than $150,000.) But some taxpayers will get a second chance to claim the rebate, which is actually an advance credit on 2008 taxes. So, if your income dropped this year, you can still claim the rebate when you file your 2008 return.

5. Real estate is not a very lucrative investment over the long haul. The real estate party over the past decade or so (even with recent price drops) has left many people assuming that real estate is the surest long-term investment around. Conversely, in the long run, on average nationwide, returns from real estate fall far short compared with other investment categories. (Housing returned 4.7% annually over the last 25 years, compared with the S&P’s average return of 13.3%.)

6. You cannot just give away your money and then immediately ask Medicaid to pay for nursing home care. If you want Medicaid to pay for your nursing care, without touching your assets, you'll have to give your money away at least five years before you apply for care. But if you use Medicaid to cover your long-term care, you will probably face a more limited choice of nursing homes.

7. Your best investment: Time. Thanks to the extraordinary magic of compounding returns, saving early is the easy way to a rich retirement.

8. Grace periods on credit cards apply only to people who do not carry a balance. If you pay the full amount you owe on your card each month, you are basically enjoying an interest-free loan from the bank. Most card users do not realize that if they carry any balance at the end of the month, the card issuer charges interest starting from the day the money was “borrowed.”

9. You can find fascinating things in your mutual fund's prospectus. Buried in a fund's official literature are such nuggets as how much money the fund's manager has personally invested in the fund. It is nice to know if the fund manager has “skin in the game.” You can also find out how much you are paying a fund to invest your money.

10. Mortgage lenders will question a cash gift used for a down payment. A cash gift from a parent can help a young adult buy a home. Nevertheless, it may come as a surprise that many lenders will raise questions when such gifts are to be used as part of down payments. Some see a large recent infusion of cash into a buyer's account as a red flag that a cash-poor buyer may lack steady income. Parents should try to make any cash transfer at lest a month, and preferably six months, before a buyer applies for a mortgage.

Pretty interesting stuff.

6. HOW CHANGES IN SOCIAL SECURITY AFFECT RECENT RETIREMENT TRENDS:

National Bureau of Economic Research has issued a new Working Paper dealing with how changes in Social Security affect retirement trends. When Congress passed Social Security legislation in 1983, one of the goals was to increase labor force participation of older workers. Legislators raised the normal retirement age and increased delayed retirement credit, phasing in these changes over decades. In 2000, the Senior Citizens Freedom to Work Act abolished the Social Security earnings test for those between full retirement age and age 70. According to data, men 65-69 were about six percentage points less likely to be retired in 2004 than in 1992. Data also indicated a corresponding difference of three percentage points between 1998 and 2004. Simulations for the structural retirement model suggests changes in Social Security rules between 1992 and 2004 increased full time work of 65 to 67 year old married men by a little under two percentage points, about a 9% increase, and increased their labor force participation by between 1.4 and 2.2 percentage points, or 2% to 4%, depending on age. Social Security changes account for about one-sixth of the increase in labor force participation between 1998 and 2004, for married men ages 65 to 67. These rule changes encourage deferring retirement from long term jobs, returning to full time work after retiring and increasing partial retirement. Although married men in their fifties decreased their participation in the labor force over this period, it is not due to changes in Social Security, but may reflect other factors, including changes in disability.

7. FINRA, INTERNATIONAL FOUNDATION TEAM UP AGAINST RETIREMENT SCAMS:

Financial Industry Regulation Authority and International Foundation of Employee Benefit Plans have launched a partnership broadly to disseminate two online resources to help companies and their older workers protect themselves from early retirement scams. The resource for companies, “Help Your Employees Achieve Their Retirement Dream: Tips for Spotting Early Retirement Scams,” offers tips on how to evaluate financial professionals involved in early retirement seminars and seminar materials such as invitations, slides, handouts and scripts. Company representatives may also refer early retirement seminar materials to FINRA for review if they have concerns. FINRA staff will review all seminar materials referred and inform the company whether the materials are consistent with applicable standards. This brochure is available at www.ifebp.org/pdf/misc/RetirementDreams.pdf. A second resource, “Early Retirement Seminars 101: Smart Tips for Spotting Retirement Scams,” alerts employees to pitfalls of early retirement schemes. This pamphlet is available at www.ifebp.org/pdf/misc/EarlyRetirement.pdf. These resources are a two-prong investor education initiative in the wake of two major FINRA enforcement actions that involve multi-million-dollar-fines and tens of millions of dollars in restitution to employees. Additional investigations are currently underway. The International Foundation is an independent global source of employee benefits, compensation and financial literacy education and information. FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. Created in 2007 through consolidation of NASD and NYSE Member Regulation, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.

8. CRASH COURSE ON DRIVING:

Residents of Sioux Falls, SD, continue to top the chart as safest drivers (do they have cars there?) in the U.S., according to the fourth annual ”Allstate America’s Best Drivers Report.” The average driver in Sioux Falls experiences an auto collision every 14.6 years. (And, just how do they know that?) Compared to the national likelihood of a collision every ten years (ditto), Sioux Falls motorists are 31.6% less likely to have an accident than the national average. Holding fast to the number two spot for the third consecutive year is Fort Collins, CO. On average, motorists in Fort Collins experience a car collision every 13.4 years, One point of full disclosure: the Allstate data exclude places where Allstate does not offer insurance products, such as the entire state of Massachusetts, Coral Springs and Pembroke Pines.

9. SOLUTION TO RETIREMENT INCOME CHALLENGE? WORK LONGER!:

Center for Retirement Research at Boston College announces a new book entitled Working Longer: The Solution to the Retirement Income Challenge. Among the book’s key findings are

• Americans need to work longer due to a contracting retirement income system, longer life spans and rising health care costs.
• Working longer does not mean working forever (gee, thanks) -- the goal should be to move the average retirement age from 63 to 66.
• Working longer improves retirement security by: (1) boosting monthly Social Security benefits; (2) allowing workers to build up larger 401(k) balances; and (3) reducing the period over which households must rely on their retirement assets.
• Most people will be healthy enough to work until at least 66.

This book reminds us about the business consultant who contracted with a merchant to provide advice on how he could obtain higher gross sales. The store owner agreed to pay the consultant $10,000 for that advice. As soon as the ink on the contract was dry, the consultant gave him the one-line solution: “Raise your prices. That’ll be $10,000, thank you.”

10. WOMAN FOLDS MAN TO DEATH:

A Russian woman killed her drunken husband with a folding couch, according to Reuters. The man’s wife, upset with her husband for being drunk and refusing to get up, kicked a handle after an argument, activating a mechanism that folds the couch up against the wall. The couch, which doubles as a bed, folds up automatically in order to save space. The man fell between the mattress and back of the couch. The woman then walked out of the room and returned three hours later to check on what she thought was an unusually quiet sleeping husband. Emergency workers sawed away side panels to remove the man, who was in his underwear lying headfirst between the cushions. Emergency workers said the man died instantly. Sofa, so good.

11. PHOENIX NAMED SWEATIEST:

Old Spice has announced results of its Seventh Annual Top-100 Sweatiest Cities List, finding Phoenix number 1 -- for the fifth year in a row. Las Vegas came in second. (And they say you don’t feel “dry heat.”) Florida can “boast” four in the top ten: Tallahassee (3), Miami (6), Tampa (8) and Fort Myers (10). The least sweaty? San Francisco, of course. “Old Spice means quality,” said the Captain to the Boatswain... .

12. HUMOR FOR LEXOPHILES:

A chicken crossing the road: poultry in motion.

13. QUOTE OF THE WEEK:

“There comes a time in the affairs of man when he must take the bull by the tail and face the situation.” W.C. Fields