COST SAVINGS THROUGH INNOVATIVE PLAN DESIGN

By Ron E. Peck, Esq.

August 2010

At my office, I promote a slogan of: “Your rights are only as good as your plan language.” All too often, clients of mine (which largely consist of self-funded benefit plans and their third party administrators), will wait for a conflict to arise, and bank on their status under the Employee Retirement Income Security Act of 1974 (ERISA) to protect them. Regardless of whether an attack is coming in the guise of a disgruntled plan participant, underpaid healthcare services provider, State insurance commissioner, or personal injury attorney, my clients always think that they can adapt their procedure to meet their needs on that day.

Nothing could be further from the truth.  Download entire article

TECHNOLOGY AND FORWARD THINKING

By Evan Dumas

June 2010

How many of us have a Smartphone or a GPS? How many of us utilize the internet in some capacity on a daily basis? These technological innovations have dramatically changed the way we live, the way we interact, the way we socialize, the way we conduct business and even the way we think. Geographical boundaries are no longer restricting the flow of information, rapidly giving way to the electronic blitzkrieg of global communication. People and systems are connected in ways and numbers like never before. There is one omnipresent commonality in each of these new connections: Data. Whether we’re thinking of text or images, movies, or even pure binary or hexadecimal code: rest assured that something, somewhere, can read, interpret, and display it. That being said, if data can be read, then it can be analyzed.

Within the next few years, we can expect exponential advances upon the innovations of the last decade. How do we prepare for this? While it is nearly impossible to be ahead of the curve, we CAN attempt to keep up with these advances by embracing the technology available to us and cultivating a more forward thinking approach when it comes to the analysis of medical claim data. To accomplish this, we need to think outside the box, or “take the blinders off”, so to speak.  Download entire article

A LITTLE CONSIDERATION, IF YOU PLEASE?

by Ron E. Peck, Esq.

June 2010

A few months ago I set pen to paper (figuratively speaking, or course), and addressed some concerns I have had with the current health benefits payer / payee system. I titled my ramblings “Who Owes Who What… and Why?” The issues I addressed struck a chord with many of my colleagues, and I am thankful for the positive feedback received.

I have since reviewed my work, and have come to realize that the issues I dealt with can be broken down into two subcategories: (1) consumer skin in the game, and (2) the added value of an assignment of benefits.  Download entire article

WHO OWES WHO WHAT… AND WHY?

by Ron E. Peck, Esq.

January 2010

Regarding the patient, provider, and benefit plan relationship – something has got to change.

Based upon my understanding of contract law, a contract consists of three things: Offer, Acceptance, and an Exchange of Consideration. In the context of a provider / patient relationship, the provider offers to treat the patient, and the patient accepts said offer. The treatment is in and of itself the consideration supplied by the healthcare provider. In exchange, the provider accepts monetary compensation as payment.  Download entire article

WARRING DOCUMENTS – A LOOK AT THE PPO NETWORK CONFLICT

by Ron E. Peck, Esq.

Winter 2009

I’m busy reading FoxNews.com’s coverage of the healthcare reform efforts on Capital Hill when my phone rings. It’s an incoming call from one of my beloved Texas based clients, so of course I pick up the receiver. After enjoying some friendly banter, we get down to business. My client is concerned. A benefit plan they administer has received a bill from a provider which they all agree seems to be excessive. “Excessive,” I inquire? Yes, my client explains… We are talking about fifty dollars per aspirin excessive. After discussing the matter some more, I determine that my client has run the claims by a bill auditing service, and they too feel that the charges are far greater than they ought to be. My client has evidence and a reasonable basis to reduce the benefits payable, so I wonder why they seem so upset. The provider is “in-network.” Oh. Download entire article

CLEAN CLAIM AND PPO CONFLICTS

by Ron E. Peck, Esq.

July 2009

The response to our March Discussion of Clean Claims, and the conflicts that arise from contradictory definitions, was overwhelming. Indeed, it seems that many, if not most, of The Phia Group’s clients have suffered due to conflicts arising over Clean Claim definitions.

State and Federal laws exist which assign deadlines to claims administrators once a clean claim is received; but that begs the question – what is a clean claim?

In general, providers and PPO networks will often define a “Clean Claim” as a charge submitted utilizing a HCFA or UB-92 form. The same agreements that so define Clean Claims, also impose deadlines on benefit plans to process the charges within a certain period of time after the Clean Claim has been submitted. Download entire article

DON’T DRINK AND DRIVE (OR EXPECT YOUR CLAIMS TO BE PAID IF YOU DO)

Summer 2009

If I earned a dollar for every call and email that I have received from claims administrators in the past ten years questioning whether claims should be paid in situations where drunk drivers hit a tree in the middle of the night, I could buy a nice American made Corvette, with a briefcase full of cash in the trunk.

The typical situation involves a client asking whether claims are payable. I always utter the same initial response – “What does your plan document say?” Too many administrators believe that they can process every claim the same way across the board, administering various plans, no matter what the provisions actually say (assuming there is a provision that addresses the matter). Nothing could be further from the truth! The wording (or lack thereof) in a plan document will specifically dictate the process of handling tough claim decisions.

I found some recent interesting cases involving injuries linked to intoxication and the related claims. As you will read, every case boils down to the same two issues – the facts of the case and the terms of the plan document. Download entire article

NEVER EVENTS

Spring 2009

Undoubtedly you have recently heard about “Never Events” and their anticipated impact on the health claims payer community. Numerous entities are now either denying or contemplating denial of charges for services, supplies, care and treatment that result from medical errors that are clearly identifiable, preventable, and serious in their consequence for patients.As the confusion surrounding Never Events has created many unanswered questions, industry leaders are aggressively working to establish the best methodology to handle Never Events. You must determine what Never Events are, which Never Events will be denied, and the procedure for actually denying Never Events – both in drafting unique plan language and handling submissions.

Many employer groups are beginning to ask what their TPA is doing about using plan assets to pay for things that were medical errors, or resulted from medical errors. If a payer wants to exclude these types of charges, the administrator must retain discretionary authority to determine whether an exclusion will apply based upon information presented and ensure that their plan language allows them to do so. Finally, a prudent payer will make it clear that a finding of provider negligence and/or malpractice is not required to apply. Download entire article

CONFLICT OF INTEREST: A POST DECISION REVIEW OF THE SUPREME COURT’S METLIFE V. GLENN CASE

by Ron E. Peck, Esq.

December 2008

You have no doubt heard of the recent Supreme Court decision in Metropolitan Life Ins. Co. v. Glenn, 554 U.S. __ , 128 S.Ct. 2343; 2008 U.S. LEXIS 5030 (2008). The Supreme Court, considering how a conflict of interest may affect claims administrators processing claims, provided us with a very vague “sliding scale.” Depending upon the severity of the conflict of interest, as compared to the administrator’s procedures, the Court will decide how intensely they should scrutinize the administrator’s decision(s) regarding a given claim or claims.

In the past, administrators hung their hat on the Supreme Court’s Firestone decision, wherein it held that if a plan administrator reserves a discretionary right to interpret plan terms, Courts will apply an arbitrary and capricious standard of review. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S. Ct. 948 (1989).

Since that decision was handed down, Courts have become stricter in their analysis, and have been quick to find fault with Plans’ discretionary provisions. With that in mind, all eyes in the insurance industry should have been turned towards the aforementioned case of MetLife v. Glenn, Id.

At issue in this case was how Courts should review a denial of plan benefits, made by a benefit plan administrator who both processed and funded the Plan. The question was whether the administrator of an employee benefit plan suffers from a conflict of interest if the party paying the claims is also the party ruling on eligibility for benefits. Furthermore, if there was a conflict of interest, how would it be taken into account by a court reviewing the benefit decision? Download entire article

THE IMPORTANCE OF THE SUPREME COURT’S DECISION IN METLIFE VS. GLENN

August 2008

The issue of discretionary authority when administering an ERISA plan and the deference federal courts must show to such discretion, has been the new hot topic in ERISA law. The Supreme Court first stated in Firestone Tire and Rubber Co. v. Bruch that health plan administrators are due deference when asserting discretionary authority administering a plan. Federal courts could only overturn administrator benefit determinations if they find that the administrator has abused its discretion, which is an arbitrary and capricious standard of review.

While many have tried to chip away at the deference shown to administrators over the past twenty years, few have succeeded in overcoming the ultra-deferential standard of review. As a result, plan administrators have rarely had their decisions overturned, so long as those decisions have some evidence to substantiate them, and are thus not arbitrary or capricious. One basis for questioning administrative decisions that has been raised repeatedly over the past two decades relates to administrators with conflicts of interest – a personal stake in how the claims are processed.

In MetLife Insurance Co. v. Glenn, 2008 U.S. LEXIS 5030 (U.S. June 19, 2008) the questions that flow from the conflict of interest issue were addressed by the Supreme Court. The Court began by asking what constitutes a conflict and is such a conflict created when the same company both administers and funds a benefit plan, and when such a conflict does exist how is it to be factored into a court’s review of an administrator’s denial of benefits? Download entire article

HEALTH INSURANCE IN THE SPOTLIGHT, BUT WHAT ABOUT EFFICIENCY?

by Ron E. Peck, Esq.

Spring 2008

A casual observer will tell you that healthcare in the United States is a hot topic. During this election year, every candidate has a plan to “fix” the broken healthcare system, and provide healthcare for every American. The problem? The candidates utterly fail to address one of the real problems with healthcare: inefficiency. Health insurance carriers are blamed for the soaring costs of healthcare, yet some of the most unnecessary expenses carriers face today relate to the costs of mistakes. Often, another policy besides the health insurance is liable. Unfortunately, it is extremely difficult to compel workers’ compensation to cooperate, and very few Americans understand how medical payments coverage works, let alone how to file a medical claim with their own auto insurance or homeowner’s policy. When others fail to coordinate benefits, it costs everyone. As a result, some claims adjusters are too hesitant to pay claims that are the health insurance carrier’s responsibility, resulting in expensive and time consuming appeals. Inefficiency is one of the greatest costs the healthcare industry faces today, and yet it is hardly ever mentioned. Download entire article

PLAN CONSISTANCY

Spring 2008

As we all know, plan documents have become very complex in recent years. That’s because many benefit plans provide multiple programs such as medical, group-term life insurance, short and long term disability benefits, prescription, dental, vision, and others.

Plans can summarize all programs in a single SPD that can run to hundreds of pages or use a wrap document establishing provisions applicable to all plans and incorporating booklets prepared by TPAs.
If drafting is kept up-to-date and done carefully, nothing will go wrong. Problems arise if the SPD omits important provisions that are included in another document. Two recent cases came to different conclusions on the impact of such modifications on the rights of plans to recover benefits paid from settlements. Download entire article

THE INFAMOUS SUBROGATION AGREEMENT

November/ December 2007

The questions that I keep asking myself as a subrogation attorney would probably cause most claim administrators to give me strange looks, but tell me, what are signed subrogation agreements and what do they actually accomplish in the long run?

My work comes to a screeching halt when I encounter claims that are suspended or denied due to a lack of signed subrogation agreements. A layman would imagine that these agreements must be very important to hold up the entire claims payment process. Perhaps these agreements are the basis for the Plan’s right to reimbursement, and without them, the Plan does not have a right to reimbursement?

The answer seems like a simple one. A signed subrogation agreement between the Plan and the covered person is a contract, isn’t it? Attorneys love to get everything in writing and nothing gets a lawyer’s lips smacking like a signed contract. Yet, the Plan Document itself is also a contract. Courts have unanimously held that the summary plan document (SPD) controls the terms by which the Plan is administered, including its right to subrogation and reimbursement. If the SPD contradicts the signed subrogation agreement, either the SPD will control and consequently the agreement is ignored, or both the SPD and agreement are void. The bottom line is that you cannot create new rights for the Plan that did not already exist in the SPD.

Recently, the United States District Court for the Eastern District of Texas presided over a case involving a plan’s denial of claims due to an absence of signed subrogation agreement. Don Burgett, Et. Al. v. MEBA Medical and Benefits Plan, 2007 U.S. Dist. LEXIS 70934, (September 25, 2007). The court determined that the Plan’s reliance on a signed subrogation agreement was not supported by the SPD and not grounds for denial. Download entire article

SUBROGATION PROVISIONS – LOOK AT THEM ONCE IN A WHILE

September/ October 2007

It seems like every week I work on an extremely promising subrogation file with a chance to recover 100% of the plan’s money only to feel disgusted after reviewing the subrogation and reimbursement provision in the plan document. Why do so many plans make it so difficult for me to recover their money? Why not include the latest and best recovery rights to ensure that plan assets are protected? Maybe it is because people just do not care about subrogation. That must be why every subrogation provision is located around page 75 in the plan document!

There is a lack of subrogation knowledge in the self-funded industry. Too many administrators believe that subrogation is an irrevocable right, but that just is not the case. To protect a plan’s assets, you have to have strong and clear reimbursement provisions ensuring the plan’s ability to recover funds under state and Federal law.

In my experiences, I have found a common scenario regarding a plan’s extreme interest in subrogation. The only time that a plan wants to arrange a conference call with their lawyers, brokers, administrators, and friends is when there are hundreds of thousands of dollars in claims paid by the plan and everyone involved wants me to recover 100% of the money. When I explain that their subrogation provision has not been updated since 1985 and that the attorney for the patient has requested a copy of the plan document in writing, they begin to ask for new, updated language. The problem is that the plan provisions at the time of the accident, or at least when the claims were paid, is the language that will be in effect. New language that I had recently drafted cannot be applied after the fact. Faced with this scenario, I explain that the chance to recover 100% in this particular large dollar case may be gone. We need to have plan administrators recognize the importance of subrogation provisions, not only after experiencing a large bill that cannot be recouped, but right now, so that we can ensure proper plan rights for the future. Download entire article

ANOTHER NAIL BITER

July/ August 2007

Every subrogation attorney believed 2007 would be a pretty quiet year on the Federal Appellate and Supreme Court front following the historic Sereboff decision in 2006. Well, I guess the Courts have the same passion for subrogation as I do because the cases keep on coming!

On June 18, 2007, the United States Supreme Court granted writ of certiorari to hear the Fourth Circuit case of James LaRue v. DeWolff, Boberg & Associates, Inc., et al., 75 U.S.L.W. 3677. The Supreme Court’s ruling will once again affect the application of ERISA and equitable reimbursement rights for self-funded ERISA plans. The Plaintiff LaRue alleged a breach of fiduciary duty in that the administrator had failed to implement the investment strategy LaRue had selected for his employee retirement account, resulting in a depletion of his plan assets of approximately $150,000.

LaRue sought appropriate “make whole” and other equitable relief in Federal Court, pursuant to ERISA, and both the District Court and Court of Appeals determined that the remedy he sought fell outside the scope of “equitable relief” as defined by § 1132(a)(3) of ERISA. The Courts held that money damages were the classic form of legal relief, absent from the list of equitable remedies available under § 1132(a)(3). The Plaintiff could not recover under an equitable restitution theory since he did not allege that funds owed to him were in defendants’ possession but instead that the funds never materialized. Download entire article

GREAT, WE WON IN SEREBOFF – NOW WHAT?

June/ August 2006

May 15, 2006 will go down as a historic day for the self-insured industry. As many of you have heard or read, the Supreme Court of the United States handed down a unanimous decision in Joel Sereboff vs. Mid-Atlantic Medical Services, Inc. This case is a resounding victory for self-insured ERISA plans and medical stop loss carriers because it allows entities to enforce subrogation recoveries and to seek relief in the Federal Court system.

The Supreme Court followed its 2002 decision in Great-West Life & Annuity Insurance Company v. Knudson and held that if the settlement funds are controlled by the plan participant and the participant is a party to the recovery action, then an ERISA plan can seek federal relief to enforce the terms of their plan. The potential disaster from a negative decision in Sereboff for subrogation recoveries nationwide has been overcome! I won’t lie – I was sweating for a few months there, particularly while sitting and listening to the oral arguments at the Supreme Court.

The Sereboff case clarified and answered many questions that were left after the Knudson decision, and places restrictions on plan participants who take settlement money, refuse to repay the benefit plan and then spend the settlement funds. The key is that as long as settlement funds are not dispersed, we have a great chance to recover money across the country. While this is a very favorable decision, the battle for successful subrogation recoveries will not end – your attention to subrogation activities must actually increase in order to have a positive end result for your plans. Counsel for plan participants will still seek to frustrate recoveries, and they are already developing new arguments and objections to returning money that rightfully belongs to the plans and stop loss carriers. Download entire article

THE LATEST ON SUBROGATION RIGHTS

March/ April 2006

Some potentially great news has arrived offering protection to self-funded ERISA plan subrogation and reimbursement rights under the Pension Protection Act of 2005.

The much discussed Supreme Court decision in Great-West Life Insurance & Annuity Company v. Knudson has led to a split among the federal circuits as to whether an ERISA plan can subrogate or seek reimbursement. The Sixth and Ninth Circuit appear reluctant to allow subrogation or reimbursement, while other circuits, such as the Fourth, Fifth, Seventh, and Tenth, have held that a plan’s subrogation action can be equitable. For this reason, the Supreme Court has decided to hear arguments in the Fourth Circuit Mid Atl. Med. Servs., LLC v. Sereboff case on March 28, 2006 with a decision likely by July 2006. Download entire article

WHERE IS THE SUBRO PROVISION?

Winter 2006

In the exciting life of a subrogation attorney – don’t laugh, it really can be – there are many situations where I take a quick glance at a case and smile knowing that as long as I have good subrogation and reimbursement rights, then my health insurance client will be reimbursed in full. But just like watching my favorite team blow a lead in the final minutes of a game, I become devastated after reviewing the plan document.

Time and time again, I have extremely promising subrogation files with great potential to recover 100% of plan funds only to feel dejected after reading the plan document. Why do my clients have to make it so difficult? Why not have proper language to ensure plan assets are protected? As we all know, subrogation provisions are in the back pages of the plan document, usually around page 70. I often wonder if anyone notices the language other than me. I think to myself “did the broker see this, how about the service representative for the plan, the general counsel for the plan didn’t notice that this language…well, doesn’t smell too good?” Well, my friends that is the life of a subro specialist – there is just no love.

As we all have seen, plan documents are often not updated for years. I am currently working on a large dollar subro file involving a car accident in May 2005 and while reviewing the plan document, I realized that it had last been updated in 1999. Let me just say that the subro provisions aren’t up to par with the current legal requirements. Sometimes I have to go through each page of the entire document twice to believe it, but no subrogation provision exists at all. That’s right – the Plan never actually thought of having language inserted to protect its ability to recoup valuable plan assets. Download entire article

RECOGNIZING SUBROGATION

September/ October 2004

Over the past several years the once strong subrogation rights under ERISA have been victimized by court sponsored erosion. Across the country, Federal courts have begun to poke holes in ERISA subrogation to the point where it is now incumbent upon plan administrators to recognize that ERISA is not the protector of subrogation it once was. Health plans must now act to protect subrogation rights in the face of bad case law, weak plan language and creative arguments from plaintiffs’ attorneys.

Most readers of this article need to pay special attention to the Ninth Circuit of the Federal Court as many of your plan members and clients reside in states of this circuit. The Ninth Circuit has had a long history of anti-subrogation decisions. Since the early 1990s this Circuit has attempted to limit a plan’s ability to obtain subrogation recoveries. The events beginning in early 2002 are no exception. Download entire article