When the book is closed on 2019, it will be remembered by many risk managers as the “hardest” insurance market in years. While the effects of a hardening market have been more pronounced in some sectors and magnified for specific coverages, policyholders across the board have experienced increases in premiums, reduced capacity, and more restrictive terms in all lines. These adverse market conditions have appropriately prompted many insureds to develop new strategies for renewals in 2019 and in the year ahead. Equal attention should be paid to the pursuit of outstanding claims. Effective claims management can not only increase recovery for the policyholder in the short run but may also influence future underwriting and the impact of continued hardening in markets over the coming year. Here are five tips for policyholders to increase recovery of claims in the current hard insurance market. Provide Timely Notice Of Claims & Continue To… Continue Reading
Fifth Circuit Defers to Plan Administrator’s Claim Appeal Decision Involving Competing Medical Opinions
In Rittinger v. Health Alliance Life Insurance Company, the U.S. Court of Appeals for the Fifth Circuit, whose jurisdiction includes Texas, analyzed the claims decision-making process of a group health plan administrator that had been granted discretion under the terms of the employer’s group health plan. The court determined that, based on such grant of discretion, the plan administrator’s decision regarding a participant’s benefits claim appeal was entitled to judicial deference, even with respect to the plan administrator’s selection of competing medical providers’ opinions. Background regarding Grant of Discretion under ERISA Under general standards, a court will consider denials of appealed benefits claims under an employer-sponsored employee benefit plan (including a group health plan) that is subject to ERISA on a “de novo” basis, which means that the court will not give any deference to the plan administrator’s prior decision on a benefit claim appeal, but instead can substitute its… Continue Reading
Under ERISA, a participant in an ERISA-covered plan has the right to designate an authorized representative to act on his or her behalf in connection with claims and appeals. The plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. Earlier this year, the DOL issued an information letter stating, in part, that: “The plan must include any procedures for designating authorized representatives in the plan’s claims procedures and in the plan’s summary plan description (“SPD”) or a separate document that accompanies the SPD.” Employers that sponsor ERISA plans should (i) verify that the claims procedures in each plan and SPD contain reasonable procedures for designating authorized representatives and (ii) amend the plan and SPD as needed. View the DOL information letter.
A federal district court in Michigan, in Zack v. McLaren Health Advantage, Inc., recently considered whether the claims regulations under ERISA require an employer-sponsored group health plan to disclose its methodology for determining the “reasonable and customary” amount related to a benefit claim for services rendered to a plan participant by an out-of-network medical service provider, regardless of whether the participant requested such information. Summary of the Case The claimant, Zack, who was a participant in the group health plan sponsored by her husband’s employer, obtained medical services from an out-of-network provider and filed a benefits claim under the plan. The plan stated that out-of-network benefits would be paid at 60 percent of a “reasonable and customary amount”, but did not define what that term meant or how it would be calculated. In practice, the “reasonable and customary amount” under the plan (“R&C Amount”) was determined by calculating an average… Continue Reading
Employers sponsoring employee plans that provide “disability benefits” are reminded that the new disability benefit claims procedures, as issued by the DOL under ERISA (the “Disability Procedures“), are applicable to disability benefit claims filed after April 1, 2018. According to the DOL, a benefit is a “disability benefit” under ERISA’s claims regulations (including the Disability Procedures) if the plan conditions the availability of the benefit upon evidence of the participant’s disability. The Disability Procedures may thus apply not only to long-term and short-term disability plans that are subject to ERISA, but also to other types of ERISA benefit plans, such as group health plans and qualified and non-qualified retirement plans, if the plan provides benefits that are based upon a determination of disability that is made under the plan. (See our prior blog post for more details regarding impacted plans.) Plan sponsors should ensure that (i) the claims procedures of… Continue Reading
The U.S. Department of Labor issued final regulations revising the ERISA claims procedures that apply to employee benefit plans offering disability benefits. Generally, these final regulations extend certain procedural rules applicable to claims submitted under group health plans to disability benefit claims submitted under ERISA plans that provide disability benefits. The final regulations apply to claims for disability benefits filed on or after January 1, 2018. View the final regulations here.
In the case of Connecticut General Life Insurance Company v. Humble Surgical Hospital, LLC, Cigna, as third-party administrator for various group health plans subject to ERISA (the “Plans”), sued Humble Surgical Hospital (“Humble”), an out-of-network provider, to recover overpayments Cigna had allegedly paid to Humble as a result of Humble’s “fraudulent billing practices,” such as waiving patients’ financial responsibility under the terms of the Plans. Prior to bringing its suit, Cigna had begun processing claims submitted by Humble outside of its standard claims processing model, based on Cigna’s determination that such claims were fraudulent. This resulted in Cigna paying significantly less on Humble’s claims than it would have paid if Cigna’s standard out-of-network repricing methodology had been utilized. Consequently, Humble countersued Cigna under ERISA, based on its status as an assignee of the Plans participants’ claims, seeking payment for underpaid claims as well as monetary penalties under ERISA for Cigna’s… Continue Reading
An ERISA plan participant assigned her claims for benefits under an employer-sponsored group health plan to her medical service provider. The service provider then assigned those claims to a sub-assignee collection agency which brought suit against BlueCross BlueShield of Florida. Citing Fifth Circuit precedent, the Eleventh Circuit held that the collection agency had derivative standing to sue under ERISA Section 502(a), notwithstanding the agency’s status as a sub-assignee of the participant’s benefit claim. The Court explained that nothing in ERISA prohibits a non-healthcare provider from obtaining derivative standing through a sub-assignment, and that allowing a healthcare provider to sub-assign claims does not frustrate the purposes of ERISA. Note that the holding of this case is relevant for ERISA plan sponsors only to the extent that plan participants are permitted under the terms of their plans to make initial assignments of plan benefits. Gables Ins. Recovery, Inc., v. Blue Cross &… Continue Reading
In the case of Penn. Chiropractic Ass’n v. Blue Cross Blue Shield Ass’n, a third-party claims administrator for an employer-sponsored group health plan (“IBC”) claimed to have made overpayments to members of an association of chiropractors (“PCA”) who were participating providers in IBC’s network. As allowed by the provider agreement between IBC and the PCA members, IBC recovered the overpayments by offsetting future claim payments owed to the PCA members. The PCA members sued IBC, claiming that IBC failed to adhere to the notice and appeal requirements under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), in attempting to recover the overpayments. The federal district court agreed with the PCA members, finding that, because the plan documents provided that IBC would make payments directly to in-network providers for covered services, the PCA members were “beneficiaries” for purposes of ERISA. Further, the court found that IBC’s recoupment of… Continue Reading