Many involved in the administration of ERISA Plans do not realize that some state insurance law is preempted even when a fully insured ERISA Plan is involved.
In Spellman v. United Parcel Service, 540 F. Supp.2d 237 (D.C. Maine 2008), the Court addressed an issue of enforcing Maine’s workers’ compensation statutes with regards to health plans under ERISA. 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
By Ron E. Peck, Esq.
If you have read the postings below (addressing the ongoing Supreme Court case of MetLife v. Glenn) you will note that the matter of what standard of review a Court applies when reviewing an administrator’s decision, is a major topic of conversation. The issue literally dominates how much power administrators will have to interpret the terms of their plan documents. In general, having discretion to interpret terms, and enjoying the Court deference that comes with it, is extremely important to administrators. Discretion and deference, however, do not always guarantee Court acceptance of an administrator’s interpretation of plan terms. Read more
By Ron E. Peck, Esq.
On April 30th, we posted a discussion of the ongoing Supreme Court case, MetLife (Metropolitan Life Insurance Company), et al. v. Wanda Glenn, 128 S.Ct. 1117. To review, in that case the Court is questioning whether a deferential standard of review - the standard ordinarily applied by Courts reviewing ERISA administrator decisions when the Plan reserves discretionary authority - should be replaced by a more searching analysis when the administrator financially benefits from denials. Read more
By Ron E. Peck, Esq.
All eyes in the insurance industry should be turned towards the ongoing case of MetLife (Metropolitan Life Insurance Company), et al. v. Wanda Glenn, 128 S.Ct. 1117. The United States Supreme Court granted cert in this matter on January 18, 2008, and oral arguments were heard on April 23, 2008. This case comes before the Supreme Court on appeal from the Sixth Circuit decision in Glenn v. MetLife (Metro. Life Ins. Co.), 461 F.3d 660 (6th Cir. 2006). Read more
If the summary plan description (SPD) omits important provisions, such as subrogation and reimbursement, that are included in another document, the plan may not be able to compel beneficiaries to follow those provisions. In one such case, a federal judge shot down a plan’s denial after a participant refused to sign a subrogation agreement. The plan tried to impel him to sign the agreement before he had been treated for his injuries, but the SPD was silent on the issue of executing the agreement before submitting a claim. The plan document had the requirement that members must “execute and deliver such instruments and take such actions as the Plan may require to protect the Plan’s rights.” The court rejected plan arguments that inclusion of such language in the plan document complied with ERISA. Read more
The Supreme Court has held that if a self-funded plan administrator reserves the discretionary right to interpret plan terms, in the plan document itself, courts will apply an arbitrary and capricious standard, questioning the administrator’s interpretation only if it has no reasonable basis. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S. Ct. 948 (1989). Since that decision was handed down, the courts have been more strict in their analysis of plan terms, and have been quick to find fault with plans’ discretionary provisions. 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
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 Texas Made-Whole Rule, adopted in Ortiz v. Great Southern Fire & Casualty Insurance Co., no longer applies to cases where the Plan disclaims the rule and requires full reimbursement in the plan document. 597 S.W.2d 342, (Tex. 1980). In the Ortiz case the insurance carrier relied upon arguments made in equity. The court held that health plans do not have an equitable right to recovery until the plan beneficiary is fully compensated. Id. Read more
The Tenth Circuit Court of Appeals held in Hollingshead v. Blue Cross Blue Shield of Oklahoma, 2007 WL 475832, 39 EBC (BNA) 2732 (10th Cir. 2007), that when a Plan states it will pay for only one organ transplant, the Plan may exclude charges incurred for the replacement of a previously transplanted organ that has failed. 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
An employee left her job due to carpal tunnel syndrome. She began receiving benefits under her employer’s self funded ERISA plan. The syndrome became worse, and the employee underwent surgery. She exhausted her short term benefits and applied for long term benefits under the same plan. The plan denied the benefits, and the employee sued. The court applied a de novo standard of review, meaning it examined the evidence from an entirely objective perspective seeking to determine if a reasonable trier of fact would find one way or the other. Read more