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.

UPS employee, Timothy Spellman filed workers compensation claim under UPS’s workers’ compensation insurer, who denied the claim as being not work related.  In an attempt to get his claims paid, Spellman consequently filed a claim for benefits under UPS’s health plan; however UPS’s claims administrator, MetLife also denied the claims and ruled the injury as work related.

Under the terms of Maine’s workers’ compensation statute, benefits under a health insurance plan “may not be delayed or refused because the person has filed a workers’ compensation claim based on the same personal injury or disease.” The statute is enforced by requiring that if a claimant workers’ compensation claim is pending a decision or acceptance or denial, and if the claimant is also covered under a health insurance policy, “the health carrier must determine eligibility and provide benefits to the claimant according to the terms of the health plan but without regard to any policy exclusion for work-related injury or disease.”

The Maine statute was specifically directed towards entities engaged in the business of insurance, such as plan administrators and it significantly affected the pooling of funds of self-funded plans.

UPS argued that the Maine workers’ compensation statute only applied to plan administrators or self funded plans, of which UPS was neither. Though the court agreed and dismissed the claims against UPS, the court found that MetLife was required to abide by the statute.  Although terms of the Maine statute would require MetLife to ignore the provisions stated in the plan’s SPD, the Court still held that the Maine law was protected from ERISA preemption.

This entry was posted on Tuesday, July 1st, 2008 at 12:35 pm and is filed under Maine, Preemption, Summary Plan Description. 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.