Archive for the ‘Claims Review’ Category

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

Shelby County Healthcare Corp, d/b/a Regional Medical Center v. The Majestic Star Casino, LLC group Health Benefit Plan, 2008 WL 782642 (WD Tenn.) has demonstrated that even though the SPD gives the Plan the final decision to accept or deny medical claims, discretion does not apply to the Plan’s TPA.Damon Weatherspoon, a plan participant of the Majestic Star Casino LLC Group Health Benefit Plan was involved in a single vehicle accident and sustained over $400,000 in medical expenses at the Regional Medical Center.  Reports indicated that Weatherspoon had violated Mississippi law by driving under the influence, driving without a valid Mississippi driver’s license and driving without insurance. 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

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

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