Magellan Services v. Highmark Life Insurance Company, – N.W.2d –, 2008 WL 2221979 (Iowa) (May 30, 2008) brought forward a dispute about coordination of benefits against an ERISA preemption of state regulation of a self-funded health plan based upon the presence of stop loss coverage.

John was covered under his father’s health insurance policy, however this plan was self-funded, and she was afraid that Magellan’s plan administrators might deny her son’s specialized leukemia treatment because such care was not “medically necessary”, so to assure coverage Jane purchased an individual policy from Wellmark. The Wellmark policy was issued pursuant to Iowa Code chapter 513C, which requires health insurers operating in Iowa to provide a basic or standard level of health insurance coverage to an Iowa resident regardless of the person’s health status.

The coordination of benefits dispute took place when Magellan’s stop loss carrier, Highmark, refused to reimburse Magellan on the grounds that the individual policy carrier, Wellmark should be the primary carrier.  Highmark argued its decision, stating that ERISA preempted the state regulation.

Though Highmark insisted state law did not apply, the Iowa Supreme Court decided against Highmark, finding that the state insurance regulation mandating that policies issued pursuant to Iowa Code section 513.9 did not fall within ERISA’s preemption provisions.  The decision held that this aspect of state law, as found in the Iowa insurance regulation, and in Iowa statutory law, is not preempted by ERISA.

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This entry was posted by Adam V. Russo on Friday, June 6th, 2008 at 3:56 pm and is filed under Coordination of Benefits, Iowa, Preemption. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.