Archive for the ‘9th’ Category

The fact that a stop-loss insurer reimbursed a plan for some of the benefits the plan does not affect the plan’s ability to seek recovery from the participant’s tort settlement with a third-party tortfeasor. A federal court in Idaho upheld that outcome, allowing the plan to assert an equitable lien. The plan was covered by a stop-loss policy with a $50,000 stop-loss trigger. The participant incurred nearly $125,000 in health expenses and the plan received nearly $75,000 from the stop-loss insurer. The plan sought assets from the settlement. Clear plan provisions stated it had a right to the settlement funds. The court rejected arguments that stop-loss insurance makes a self-funded employee benefit plan insured for the purpose of ERISA preemption. The court concluded that the participant signed away her right to invoke the make-whole rule, because the plan specifically provided that it was entitled to reimbursement of the benefits paid even if the plan participant was not made whole. Read more

From the August 13, 2009 EBIA Weekly
Wiley v. Cendant Corp. Short Term Disability Plan, 2009 WL 1940780 (N.D. Cal. 2009)

The employee in this case was denied disability benefits and sued his employer’s plan. In this decision affecting only the standard of review to be applied in later proceedings, the employee asked the court for the less deferential “de novo” standard, claiming that the plan documents did not unambiguously confer discretionary authority on the claims administrator because the SPD and contract (which was presumably the plan document) were in conflict. (A more deferential “abuse of discretion” or “arbitrary and capricious” standard of review applies if the plan document gives the plan decisionmaker discretionary authority to make benefit decisions.) The plan’s SPD gave only limited discretion to the claims administrator, but broad discretionary authority to the employer’s benefits committee. In contrast, the contract between the claims administrator and the employer gave the claims administrator complete authority to review all benefit denials, including discretionary authority to determine whether employees were entitled to benefits and to construe plan terms. The employee also argued that the disclaimer language in the plan’s SPD, which provided that the plan documents would control over the SPD if there was a conflict between the two, should not be enforced. Read more

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The 9th U.S. Circuit Court of Appeals has affirmed a lower court’s decision that that a health plan administrator should be reimbursed for benefits it paid for a woman who was falsely represented as a participant’s legal spouse.
EBIA reports that the appellate court agreed with the U.S. District Court for the Western District of Washington that the $70,000 reimbursement is considered equitable relief under the Employee Retirement Income Security Act (ERISA). The courts rejected Ralph W. Cutter’s argument that because the benefits were not paid directly to him and were not in his possession, the plan could not seek reimbursement from him. Read more

by Amanda Bronstad of The National Law Journal, www.law.com

An association representing the restaurant industry has filed a petition for writ of certiorari before the U.S. Supreme Court to overturn a ruling by the U.S. Court of Appeals for the 9th Circuit upholding a law requiring employers in San Francisco to provide health insurance to their employees. Read more

The court found that Sun Life failed to sufficiently allege that the particular funds to which it claims an entitlement to under the Plan’s reimbursement provision are funds belonging in good conscience to Sun Life and can clearly be traced to particular funds in plaintiff’s possession or control. Therefore the court could not impose a constructive trust or equitable lien on such funds. In this case, the district court held that the claim for reimbursement did not adequately allege equitable relief. Read more

The Ninth Circuit provided significant guidance for the district court to consider regarding a conflict of interest involving self-funded plans in Burke w. Pitney Bowes Inc. Long-Term Disability Plan 544 F.3d 1016 (9th Cir. 2008). While the district court ruled in favor of the plan, it reached its decision prior to the Supreme Court’s decision in Glenn. The Ninth Circuit therefore remanded the matter for the district court to consider the potential conflict of interest in light of Glenn. In doing so, the court rejected the proposition that a structural conflict of interest cannot exist where a plan is self-funded, with benefits paid out of trust. The court held that even when benefits are paid out of a trust, instead of directly by an employer, the employer has a financial incentive to deny claims because every dollar not paid in benefits is a dollar that will not need to be contributed to fund the Trust. The court explained: “although there is no dollar-for-dollar correlation, it still remains true that the more that the Trust pays out in benefits, the more the plan must contribute to maintain the Trust’s solvency.”

The Ninth Circuit, in Daic v. Hawaii Pacific Health Group Plan for Employee of Hawaii Pacific Health, No. 06-17324, 2008 WL 3862074 (9th Cir. Aug. 13, 2008) analyzed whether MetLife, the insurer who administered the ERISA plan but was not a specifically names fiduciary, was nonetheless a plan fiduciary and whether, in light of Glenn the district court erred by inadequately considering MetLife’s structural conflict of interest. Read more

It’s relatively easy for a health plan to establish its right to an equitable lien against tort settlement proceeds. However, if the plan participant actually receives those proceeds and uses them for his or her own purposes, the plan will probably find it difficult to trace those proceeds.

The plan might be able to establish that a specific asset, such as a home might be subject to a constructive trust in favor of the plan. However, taking possession of such an asset and liquidating it will be problematic. Read more

In Board of Trustees v. Hill, 2008 U.S. Dist. LEXIS 96239 (N.D. Cal. Nov. 25, 2008), the Court held that plan language establishing priority of payment – without specifically disclaiming the make whole rule – was sufficient to disclaim the concept. Read more

For a second time, Supreme Court Justice Anthony M. Kennedy has refused to interfere with a San Francisco local ordinance that sets minimum health benefits for workers. In a brief order, Kennedy denied an application by restaurant operators in the city to delay a Ninth Circuit Court ruling that had upheld the city ordinance on mandated health spending. The Justice acted without issuing an opinion in Golden Gate Restaurant Association v. San Francisco.

by Amy Lynn Sorrel, AMNews staff, www.amednews.comSan Francisco’s universal health access program scored another victory in the courts in a decision that has set the stage for a possible U.S. Supreme Court showdown over the use of employer mandates as part of health system reform.

The full 9th U.S. Circuit Court of Appeals in March upheld an earlier decision by a panel of three of its judges validating the city program’s employer spending provision. The provision requires businesses to contribute a minimum amount toward workers’ health coverage or pitch in to a city fund for Healthy San Francisco, a universal access program offering primary and preventive care to uninsured residents. Read more

Since the Glenn decision, a number of circuits have had an opportunity to consider and apply the Glenn Court’s reassessment of ERISA’s standard of review.Roumeliote v. LTD Plan for Employees of Worthington Industries, 298 Fed. Appx. 472 (6th Cir. 9/11/2008).

This was the first circuit to apply Glenn since Glenn was a Sixth Circuit decision and the Sixth Circuit’s determination in that case was affirmed by the Supreme Court. The Sixth Circuit affirmed the district court’s decision that the claim administrator’s denial of benefits was not arbitrary. Read more

by Jerry Geisel of Business Insurance

San Francisco- The 9th U.S. Circuit Court of Appeals’ decision last week not to review a 2008 appeals panel ruling upholding a San Francisco health care spending law brings one step closer to a potential U.S. Supreme Court review and perhaps a final resolution on the legality of employer spending mandates.

In a case followed by employers nationwide due to its potential impact on the design, cost and administration of corporate health plans, a majority of appeals court members rejected a request for the full appeals court to review a unanimous ruling by a three-judge panel of the court that the law could stand. Read more

From the Clear Direction Blog www.cleardirectionblog.com
Posted: 18 Mar 2009

A recurring issue for health plan subrogators is what language is sufficient to override the make whole rule. On the one hand, Circuits like the Fifth Circuit have held that no particular language is required to overcome the make whole rule. In the Fifth Circuit (and others like it), plan language simply providing for 100% recovery is sufficient. Read more

I recently received an email from a colleague of mine, James R. McKown, CEO of Recovery Data Connect, L.L.C., notifying me about a 9^th circuit decision emphasizing three major factors in the case: plan language creating an automatic lien, rejecting the Made Whole Doctrine and preventing the plaintiff from challenging related medical claims due to a Sworn Declaration.  To read the entire 9^th circuit decision, Laborers v. Hill, United States District Court for the Northern District of California (November 25, 2008). Click Here