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
Final regulations were recently released by the U.S. Departments of Labor, Health and Human Services, and the Treasury (collectively, the “Departments”) which create two new options for providing employer-sponsored group health coverage under a health reimbursement arrangement (“HRA”). The Departments also issued a set of FAQs which outline key points regarding these new HRA options and other changes reflected in the regulations. An HRA is a type of account-based health plan that employers may use to reimburse employees for their medical care expenses. Individual Coverage HRA The first option, an “Individual Coverage HRA,” may be offered by employers as an alternative to coverage under a traditional group health plan (“Traditional GHP”), subject to certain conditions. In effect, Individual Coverage HRAs extend the federal tax advantages that are afforded to Traditional GHPs (i.e., exclusion of premiums and benefits received from federal income and payroll taxes) to HRA reimbursements of an individual’s… Continue Reading
The U.S. Department of Labor has released updated model Summary Annual Reports (“SARs”) for retirement plans and for welfare benefit plans that are subject to ERISA. Generally, a plan that is required to file an annual Form 5500 is also required to distribute a SAR to plan participants and beneficiaries within nine months from the end of the plan year. View the updated model SAR for welfare plans. View the updated model SAR for retirement plans.
The IRS recently issued Revenue Procedure 2019-25, which sets the 2020 calendar year limits on (i) annual contributions that can be made to a health savings account (“HSA”) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (“HDHP”). The 2020 limits are as follows: Annual HSA contribution limits: $3,550 for self-only coverage ($50 increase from 2019); $7,100 for family coverage ($100 increase from 2019) Minimum HDHP deductibles: $1,400 for self-only coverage ($50 increase from 2019); $2,800 for family coverage ($100 increase from 2019) HDHP out-of-pocket maximum limits: $6,900 for self-only coverage ($150 increase from 2019); $13,800 for family coverage ($300 increase from 2019) View Rev. Proc. 2019-25.
In its recent decision in State of New York v. U.S. Department of Labor, the federal district court for the District of Columbia vacated key provisions of the final regulations issued in 2018 by the DOL under ERISA regarding the establishment of “association health plans” (the “Final Regulations”). The Final Regulations broadened the criteria under ERISA for determining when a group of employers may join together as a “single employer” to sponsor a single group health plan in the form of an association health plan (“AHP”). The Final Regulations were applicable to fully-insured AHPs as of September 1, 2018, to existing self-funded AHPs as of January 1, 2019, and to newly created self-funded AHPs as of April 1, 2019. See our prior blog post for additional information regarding the Final Regulations. In response to the Final Regulations, 11 states and the District of Columbia sued the DOL alleging that (i) key… Continue Reading
Section 223 of the Internal Revenue Code provides that an individual’s interest in the balance of her health savings account (“HSA”) is not subject to forfeiture. Consequently, contributions made by an employer to an employee’s HSA may be recouped only in very limited circumstances. In IRS Notice 2008-59 (the “Notice”), the IRS described several specific circumstances in which an employer may recoup contributed amounts from the HSA trustee. However, in its recently released Information Letter 2018-0033 (the “Letter”), the IRS confirmed that the circumstances discussed in the Notice were not intended to be exclusive and clarified that if there is clear documentary evidence demonstrating an administrative or process error on the part of the employer or the HSA trustee (an “HSA Process Error”), an employer may request that the HSA trustee return the amounts to the employer, with any correction needed to put the parties in the same position they… Continue Reading
An employer should be cautious to not “endorse” a voluntary benefits program that the employer wants to be exempt from ERISA. The DOL’s safe harbor exempting certain plans from ERISA (often called “voluntary plans”) requires the sole function of the employer to be, without endorsing the program, to permit the insurer to publicize the program to employees and to collect premiums and remit them to the insurer. Federal courts have found impermissible endorsements where employers either encouraged their employees to participate in their voluntary benefits program or selected the insurer and limited eligibility criteria. For example, in October 2018, the U.S. Court of Appeals for the Third Circuit decided a case involving whether the employer’s endorsement of a volunteer disability benefits program caused it to be subject to ERISA. The Court found that (i) a reasonable employee would not view the program as being merely a third-party offering and (ii)… Continue Reading
In conducting due diligence in connection with a corporate transaction, it is common for buyers to request copies of the target’s current contracts with its benefit plan service providers like the recordkeeper and third party administrator. Buyers should also consider obtaining information regarding how long the target has been using their current service provider. If there has been a change in service providers in the prior several years, buyers should also consider requesting copies of contracts with the target’s previous service providers. This is true especially if there is a concern that there might be operational errors that would require correction, since information will likely have to be obtained from the plan’s prior service providers.
An impermissible acquisition, access, use, or disclosure of HIPAA “protected health information” (“PHI”) under an employer’s group health plan (which is a “Covered Entity” under HIPAA) is not uncommon. If such a breach occurs with respect to the PHI of a Covered Entity, the employer needs to know that the Covered Entity may be required by HIPAA’s breach notification rules (the “Breach Rules”) to issue certain notices and perform other tasks. Analysis of the Impermissible Acquisition, Access, Use, or Disclosure of PHI An impermissible acquisition, access, use, or disclosure of PHI is presumed to be a “breach” unless the Covered Entity demonstrates that there is a low probability that the PHI has been compromised. The Breach Rules outline the four-factor risk assessment that a Covered Entity must perform (and document) in order to make such a demonstration. If, after completing the step above, the Covered Entity determines that a “breach”… Continue Reading
The third-party administrator (“TPA”) in this case, UnitedHealth Group and its related entities (“UnitedHealth”), engaged in “cross-plan offsetting”, which involves not paying a claim under Employer A’s group health plan in order to recover an overpayment made by Employer B’s group health plan to the same healthcare service provider. For example, assume UnitedHealth overpaid a provider by $200 on behalf of Employer B’s group health plan, and a participant in Employer A’s group health plan incurred a $250 claim with that same provider. UnitedHealth would only pay the provider $50 on behalf of the participant in Employer A’s group health plan. The U.S. Court of Appeals for the Eighth Circuit agreed with the federal district court that UnitedHealth’s interpretation of the plans was unreasonable and cross-plan offsetting was not permitted under the plans because (i) interpretations that authorize practices that push the boundaries of what ERISA permits should be viewed… Continue Reading