Archive for the ‘Stop Loss’ Category

The Boeing Company v. Thurmon, No. 4:09-cv-1456, in the United States District Court for the Eastern District of Missouri, December 7, 2009. This is a subrogation case, significant for its fresh and express reiteration of the bedrock proposition that purchase of stop loss insurance by the sponsor of a self-insured employee benefit plan does not affect pre-emption analysis. In other words, a self-insured plan is still a self-insured plan, despite the existence of excess loss coverage. Read more

Self-Insurance Institute of America ( www.SIIA.org) and Society of Professional Benefit Administrators ( www.SPBATPA.org) have endorsed a standardized stop-loss disclosure form, which also includes ICD-9 codes. The documents are intended to help facilitate the sharing of health data information between self-insured entities/TPAs and stop-loss insurers/MGUs for the purpose of medical stop-loss underwriting. Read more

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

EBIA Weekly, www.EBIA.com

Majestic Star Casino v. Trustmark, 2009 WL 3260561 (N.D. Ill. 2009)

This case involved employees who incurred large health care expenses while on approved 90-day leaves of absence. The employer sought reimbursement for the excess expenses under the stop-loss policy issued in connection with its self-funded health plan. But the stop-loss insurer denied payment, arguing that the employer had been obligated—as a condition of reimbursement under the stop-loss policy—to provide COBRA election notices to the employees within 30 days of their first day of leave. The employer argued that its health plan provided full coverage for the first 90 days of a leave of absence, so that no COBRA election notice was required until the end of the leave (assuming the employee terminated employment by not returning to work). Indeed, one of the employees involved in the case did not return at the end of the leave, and the employer did provide a COBRA election notice at that time. The employer sued the stop-loss insurer for reimbursement under the policy. Read more

An inquiry by a TPA to the New York Insurance Department asked whether stop-loss insurers are subject to the prompt-pay rules of Insurance Law § 3224-a. In April 1982, the Insurance Department issued Circular Letter 7, which provides that stop-loss insurance is not reinsurance, but rather a form of accident and health insurance that may not be placed by excess line brokers. In 1999, the Legislature confirmed that stop-loss insurance is a form of accident and health insurance by enacting Insurance Law § 4237-a. Read more

by John Wood of ERISA and Disability Benefits Law Blog, www.erisaontheweb.com

Sherry DeLisle continued working after her car crashes in 1998 and 2000. She suffered spinal and closed head injuries. Her employer, Krandall & Sons, fired her on April 17, 2002, stating that “she was not doing her job.” Eight months later, DeLisle filed for long-term disability benefits with Sun Life, the insurer of Krandall’s disability plan. She submitted medical records and statements of five treating physicians. She listed April 17, 2002, as her date of disability. Read more

by Karen Pallarito of Business Insurance, www.businessinsurance.com  

Here are a few tried-and-true strategies to trim health care-related expenses without slashing benefits or shifting costs, experts say:

Compare reinsurance companies. Make sure your third-party administrator is working with well-regarded reinsurance providers, because spending on stop-loss coverage can run between 8% and 15% of total costs, said Helmut Braun, chief operating officer in the Lexington, Ky., office of UMR, a unit of UnitedHealth Group Inc. Read more

A Federal Court of Appeals verdict reversed the decision of both Wisconsin arbitrators and the Federal District Court in Edstrom Industries Inc. v. Companion Life Insurance Co., No. 07-2165, where the arbitrator and trial court failed to apply Wisconsin law holding that stop-loss insurance is not considered to be “reinsurance”.

Wisconsin Federal District Court sustained an arbitrator’s decision in a stop loss case between the group Edstrom Industries and its stop loss carrier.  The arbitrator had ruled in favor Of Companion Life, holding that Edstrom failed to disclose information to its stop-loss carrier, Companion Life, concerning a seriously ill dependent child. Read more

This 4^th Circuit case is another addition to the growing list of cases holding that contractual disputes between plan sponsors and claims administrators are subject to state law.

The defendant in this case, Information Systems and Networks Corp. (”ISN”) established a self-funded health benefit plan governed by ERISA.  ISN purchased insurance from the plaintiff in this case, Great-West Life and Annuity Insurance Company (”Great-West”) to cover some benefits under the Plan.  ISN also contracted separately with Great-West to provide stop-loss coverage. 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