Archive for the ‘Claims Procedures’ Category

by Kristin Gunderson Hunt of Business Insurance, www.businessinsurance.com

Approximately $19 billion designated for health care information technology in the economic stimulus package signed into law by President Obama and the push to establish an electronic medical record for every U.S. citizen by 2014 likely will not directly affect employers and their benefits departments, experts say. Read more

One of the biggest problem areas in the healthcare industry is the practice of balance billing of patients by non-participating providers for services reimbursed by the patient’s insurer at less than the provider’s billed charges.  The providers’ demand to be paid the balance then becomes a point of contention in a three way battle between the provider, the patient and the insurer.  The provider just wants to be paid its standard charge, the patient wants the insurer to cover whatever the patient owes, and the insurer wants to limit its outlay to the payment of a reasonable charge. Read more

Based on the Supreme Court’s decisions in MetLife and LaRue, employers should consider making changes and acting proactively to implement strategies to help ensure that plan disputes are channeled through a committee and that the committee’s decisions receive deference from the courts.

Many corporate officers, employees and board members serve as ERISA fiduciaries. For a fiduciary accused of breaching its duties under ERISA, the stakes are high. ERISA Section 409 imposes personal liability on a fiduciary that breaches its duty. ERISA authorizes lawsuits against fiduciaries by participants, beneficiaries, the plan administrator, other fiduciaries ,and the U.S. Department of Labor. The federal courts have uniformly held that ERISA’s fiduciary duty is “the highest duty known to the law.” Read more

TPAs rely heavily on ERISA’s requirements that claimants must exhaust their administrative remedies before going to court, and when they do sue, assuming that the Plan documents grant the claim administrator the appropriate discretionary authority, they must show that the claim administrator abused its discretion when denying their claim, before any court will get to the merits of their allegations.

Few plaintiffs are able to meet these burdens, and so either don’t sue or often get their lawsuits quickly dismissed.  Until recently most courts were not very sympathetic to plaintiffs’ arguments of procedural violations, but things are changing, the most significant development being the Supreme Court’s decision this summer in MetLife v. Glenn. Read more

by Ron E. Peck, Esq.

Offset: Denying future claims to reimburse the Plan for claims it has paid prior to third party settlement.  It is a form of lien reimbursement.

Denial of Future Medical Claims: Denying future claims because they were caused by, and are the responsibility of a third party with whom the insured has settled or will settle, and thus for which the insured has removed liability from the third party and shifted responsibility onto him or herself.

Confusion regarding how a benefit plan and its administrator handle future claims resulting from an incident for which another party is or may become responsible is widespread.  The greatest mistakes administrators make is confusing “offset” with “future credits” and other future claims, as well as confusing subrogation with exclusions. Read more

The Supreme Court will be granting certiorari to MetLife, et al., v. Wanda Glenn.  While MetLife v. Glenn reinforces a third party administrator’s (”TPA”) right to make administrative decisions and interpret the terms of benefit plans when it is not the party funding the plan, this case asks whether a Plan Administrator faces a conflict of interest if it not only determines whether a claim is payable, but also pays the claim with its own funds. Read more

There is a recent newsworthy item that I wish to discuss, as it is pertinent to our industry.  The November 20, 2007 Wall Street Journal featured an extremely negative cover story, relating to the self-insured industry’s subrogation activities under ERISA.  These types of prominent news stories do nothing for the self-insured industry except motivate the public to change current ERISA legislation.  For those of you who do not know about this case, the story covers a woman’s collision with a semi-trailer truck seven years ago, leaving the 52-year-old Deborah Shank permanently brain-damaged and in a wheelchair. Her husband, Jim, received a $700,000 accident settlement from the trucking company involved. After legal fees and other expenses, the remaining $417,000 was put in a special trust to be used for Mrs. Shank’s care.  Read more

On September 25, 2007, a Federal District Court in New Jersey held in Mulholland v. UFCW Local 1776 Participating Employers Health and Welfare Fund, 2007 WL 2814648 (DNJ) that the purchase of stop loss insurance does not preclude self-funded ERISA status. The court went on to say that because self-funded plans can come close to becoming a fully insured plan, the question is not whether a self-funded plan has reinsurance, but rather, how high is their specific deductible. In other words, does the self-funded plan retain considerable risk of loss, or, does the Plan purchase an excessive amount of stop-loss insurance? Read more

The United States District Court for the Eastern District of Texas recently presided over a case involving a plan’s denial of claims due to a lack of signed subrogation agreement. Don Burgett, Et. Al. v. MEBA Medical and Benefits Plan, 2007 U.S. Dist. LEXIS 70934, (September 25, 2007). The Plan in this case lost, and the court determined the Plan’s conditioning payment of claims on the signing of a subrogation agreement was not supported by the summary plan document (”SPD”). The court held that the language of the SPD controls and additional agreements cannot create new rights for the Plan. Read more

The Southern District Court of Indiana held on February 8, 2007 in South Central Indiana School Trust v. Virginia Poyner, 2007 U.S. Dist. LEXIS 9368, that “in Sereboff, the Supreme Court held that Great-West did not apply to a situation where the third-party proceeds were segregated and hence “specifically identifiable.” Sereboff, 126 S.Ct. at 1874. Rather, such a claim for recovery was for enforcement of an equitable lien. Id. at 1874-75. And, going a step further, the Court said that where, as here, there is an equitable lien by agreement, there is no necessity that the funds even be specifically traced. Id. at 1875. According to the Court, the effort to recover such an agreed preexisting lien is equitable in nature.” Read more

Recently, the Eastern District Court of Michigan held in Citizens Insurance Company of America v. Pitney Bowes Software Systems Employee Medical & Health Care Service Corp., 2007 WL 713144 (E.D. Mich 2007) that where the Plan document excluded claims covered by automotive insurance in its claim exclusions section, and asserted a right to coordinate benefits with the same types of insurance, these provisions were contradictory and cancelled each other out.   This is why The Phia Group matches exclusion language with coordination of benefits and subrogation language, and advises the use of language interpretation provisions as well. Read more

In Cheryl Street v. Ingalls Memorial Hospital, (2007 U.S. Dist. Lexis 18643), the Northern District Court of Illinois held on March 15, 2007 that just as a Plan must identify funds prior to seeking equitable relief in Federal Court, so too must relief sought by participants be specifically identifiable. In one case, decided by the Third Circuit Court of Appeals, a group of employee Plan Participants brought their Plan Administrator to court for handling their assets in an irresponsible manner. In Eichorn, et al. v. AT&T Corp., et al., 484 F.3d 644, (May 2, 2007), the Court held that while ERISA makes it illegal for a Plan Administrator to prevent the attainment of rights provided by the Plan, actions that lessen the value of the rights are not so prohibited. As such, in a case like this one, the only relief available was in the form of monetary awards and back pay, which is not “equitable relief” for purposes of Federal jurisdiction. Read more

The Delaware State Supreme Court recently upheld the dismissal of a lawsuit, filed against the tobacco industry, by the foreign governments of Panama and Sao Paulo, Brazil. The nations argued that they had lost money in the treatment of citizens suffering from tobacco use complications. Ordinarily, governments, employers, and other organizations subrogate - meaning they step into the shoes of the person actually suffering as a result of the tobacco use - and pursue the responsible party in the victim’s name. In this case, the plaintiffs instead chose to (unwisely) sue tobacco companies directly. Subrogation works because the person who bought, used, and suffered due to the tobacco use has the claim. The plaintiffs in this case, however, tried to file a claim directly against parties they had never had direct dealings with, and failed. Read more

This case arose from a Plan’s failure to add an employee’s dependents to an ERISA welfare benefit plan. As a benefit of employment, the employer offered its employees health insurance. Under the Plan, the employer was both a “participant” and the “Plan Administrator.” Employees were instructed to direct their inquiries about the Plan to their employer, which acted as the general intermediary between its employees and the Insurer. Read more

In this case, an employee stopped working due to a medical condition and began receiving disability benefits from her employer’s self funded ERISA plan. After two years the case was reassessed, the TPA terminated the benefits. The insured filed suit against the TPA, seeking both payment of past claims and re-instatement of future benefits. The TPA moved to dismiss arguing that it was not a proper defendant in this case because it did not have any financial responsibility to the employee. The employer and plan, the TPA asserted, were the proper defendants. The court denied the motion to dismiss, however, stating that the TPA’s discretionary power over the payment of claims made it a fiduciary to the plan and plan members. Read more