Latest Entries

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

Although Lumbermens Mutual Casualty Company’s Summary Plan Description (”SPD”) clearly states that its Plan Administrator, Kemper Ins., has the discretionary authority to determine eligibility for disability benefits and to interpret the terms of the plan, both the District Court and Ninth Circuit Court of Appeals applied a de novo standard of review, instead of a deferential standard of review in this case, since Lumbermens violated ERISA regulations by failing to properly distribute the SPD to its plan participant, Linda Gertjejansen, (Gertjejansen v. Kemper Ins. Companies, Inc., Slip Copy, 2008 WL 1787484 (C.A.9 (Cal.)). 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

Just when it appears that a well-drafted subrogation and reimbursement provision of an ERISA group health plan takes precedent over state-law restrictions on the plan’s recovery, we find that the Supreme Court of Mississippi has ruled that ERISA does not preempt a state law that requires approval of a Mississippi court regarding the allocation of a minor’s settlement proceeds from a tort claim. The case is In re Guardianship of Danielle Holmes, 2007 WL 2792491 (Sup. Ct., Miss., Sept. 27, 2007).

Rashan Danielle Holmes, a minor, was injured in an auto accident. She was covered under her mother’s employer’s self-insured ERISA plan, which included a well drafted subrogation and reimbursement provision. The plan made an advance payment of about $46,000 toward her medical expenses. Her claim against a third party was settled for $750,000, the plan asserted a subrogation lien against the proceeds and the amount advanced pending settlement of its claim for reimbursement. Read more

Under a new MSP reporting requirement, plans working through an insurer, third party administrator (TPA) or plan administrator will have to disclose information on situations in which the group health plan was primary in relation to Medicare.

The requirement is at Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, passed by both chambers of Congress and signed into law on Dec.29. (P. Law No. 110-173) Its effective date will be Jan. 1, 2009. 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

Federal courts are permitting ERISA plans to recover the benefits they paid on account of injuries arising through the fault of some third party from tort settlement or judgment proceeds that are set up in special needs trusts. Those are usually designed to provide resources to pay for ongoing care when an individual’s injuries are so severe that he or she will need professional care either for the remainder of his or her life or for an indefinite period.

In the absence of such a resource, in most cases, individuals will be cared for through state programs such as Medicaid. When a tort settlement or judgment is substantial, the special needs trust can provide some (or perhaps even all of the required care. Or, trusts might be used to provide some amenities (such as TV or other entertainment or respites) for the injured party. Read more

The fact that an individual had medical treatment for a condition before an accident and subsequently suffered an injury that required additional treatment should not defeat a plan’s right to reimbursement for benefits paid on account of the treatment resulting from the accident. A U.S. District Court reached that conclusion in Schaffer v. Mancini, 2007 WL 2725569 (N.D. N.Y., Sept. 13, 2007). Read more

by Ron E. Peck, Esq.

In the case of Osborne v. Jauregui, Inc., the Texas Court of Appeals, Third District at Austin, has enforced the holding of Fortis Benefits v. Cantu, 234 S.W.3d 642 (Tex. 2007), and espoused an anti-double recovery policy, (Tex.App. - Austin, Aug. 29, 2007 & April 17, 2008 - No. 03-04-00813-CV).  This represents yet one more victory for subrogating insurers, and those that hope to see the costs of insurance remain within reason. Read more

by Ron E. Peck, Esq.

In the case of Ferguson v. Safeco Insurance Co. of America, 2008 WL 854841 (Mont.,2008), the Supreme Court of the State of Montana was asked to determine whether insureds could sue their insurance carrier in a class action suit, suing that insurance carrier for pursuing subrogation / reimbursement opportunities without first confirming that the insureds had been made whole.  In Montana, policies regulated by state law may not subrogate or seek reimbursement for claims paid until the claimant is made whole by the tortfeasor or other liable third party first.  Ordinarily, courts require the insured (and their attorney) to advise the insurance carrier that the insured has not been made whole, that the made whole doctrine applies, and provide evidence of the insured’s not being made whole.  In the case at hand, however, the insured sued the insurance carrier not because it ignored her claim of not being made whole, but rather, failed to investigate on its own whether the insured had been made whole prior to pursuing reimbursement opportunities. 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

Following on the heels of our previous post, CNN Anderson Cooper posted an update advising that Wal-Mart has decided to waive its right to recover the funds in controversy. 

http://ac360.blogs.cnn.com/2008/04/01/wal-mart-tells-brain-damaged-woman-keep-the-money/

While reducing or waiving a lien on a case by case basis is certainly not unusual, doing so now that this case has attracted so much attention may hurt Plan rights to subrogation in future cases.  Hopefully, this will not set an unofficial precedent whereby every patient with a sad story publicly contests the Plan’s rights to reimbursement.  If it does, the costs of providing employee benefit plans will surely skyrocket.  In the end, it is the employees who pay for “double dipping” when their contributions need to increase, or the Plan is dissolved.

By Ron E. Peck, Esq. and Adam V. Russo, Esq.

As many of you have no doubt seen, The Wall Street Journal published the story of Deborah Shank and her employer, Wal-Mart, some months ago.  In a nutshell, Ms. Shank was severely injured in a car wreck.  Her substantial medical expenses were paid for by the Wal-Mart self-funded benefit plan.  In the meantime, Ms. Shank’s family sued the insurance carrier of the truck that collided with her.  They settled their claim for $700K of the $1 million policy limit.  Part of their claim was for medical expenses; (expenses they sought to collect, but were paid for by the Wal-Mart plan).  Wal-Mart heard about the settlement, which included monies for the medical expenses, they - not the Shanks - had paid, and sought to enforce their Plan Document’s subrogation / reimbursement provision.   Read more

SIIA Members Discuss Increases in Employee Health Care Costs Since 1999.

San Francisco Restaurant Goers Pay for the City’s New Health Care Law.

Massachusetts Health Care Program Getting More Expensive.

Read More.