OVERVIEW ERISA MAN LIVES!?!? ERISA MAN IS DEAD... THE PRICE IS RIGHT INTRODUCTION FIDUCIARY DUTY IT S CATCHING ON! YOU SNOOZE YOU LOSE

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1 OVERVIEW INTRODUCTION FIDUCIARY DUTY IT S CATCHING ON! YOU SNOOZE YOU LOSE ERISA MAN LIVES!?!? ERISA MAN IS DEAD... THE PRICE IS RIGHT TO ASSIGN OR NOT TO ASSIGN GREAT QUESTION! 1

2 INTRODUCTION SPEAKER BACKGROUND SPEAKER ROLE IN INDUSTRY OVERVIEW OF SESSION PURPOSE & TAKEAWAYS FIDUCIARY DUTY IT S CATCHING ON! JOHNSON & TOWERS V. CORPORATE SYNERGIES GROUP HARTFIELD, TITUS & DONNELLY LLC V. LOOMIS CO. ATL. ORTHOPAEDIC ASSOCS., LLC V. BLUE CROSS 2

3 FIDUCIARY DUTY IT S CATCHING ON! CONN. GEN. LIFE INS. CO. ET AL. V. HUMBLE SURGICAL HOSP. LLC DRAGU V. MOTION PICTURE INDUS. HEALTH PLAN FOR ACTIVE PARTICIPANTS GUYAN INT L., INC. V. PROFESSIONAL BENEFITS ADM RS, INC. FIDUCIARY DUTY IT S CATCHING ON! LIFECARE MGMT. SERVS., LLC V. INS. MGMT. ADM RS, INC. LITTLE RIVER BAND OF OTTAWA INDIANS, ET AL. V. BLUE CROSS BLUE SHIELD OF MICH. MASON V. FED. EXPRESS CORP. 3

4 FIDUCIARY DUTY IT S CATCHING ON! PAC. SHORES HOSP. V. UNITED BEHAVIORAL HEALTH ROHAN V. UNITEDHEALTHCARE INS. CO. FIDUCIARY DUTY IT S CATCHING ON! JOHNSON & TOWERS V. CORPORATE SYNERGIES GROUP Group had widowed spouse amendment but broker forgot to give that to the stop-loss carrier when its plan was underwritten. A claim came in for that spouse, but the carrier denied it since the carrier never knew about it. Broker held as fiduciary in placing the stop-loss. 4

5 FIDUCIARY DUTY IT S CATCHING ON! HARTFIELD, TITUS & DONNELLY LLC V. LOOMIS CO. TPA held liable as fiduciary for making overpayments caused by erroneous claims processing. FIDUCIARY DUTY IT S CATCHING ON! ATL. ORTHOPAEDIC ASSOCS., LLC V. BLUE CROSS OON providers have filed suit under ERISA against the ExpressJet Airlines Plan and Blue Cross for underpayment of claims which the providers assert constitutes a breach of the fiduciary duty of loyalty. The Court has recently dismissed the defendants motions to dismiss and allowed the case to proceed. 5

6 FIDUCIARY DUTY IT S CATCHING ON! CONN. GEN. LIFE INS. CO. ET AL. V. HUMBLE SURGICAL HOSP. LLC Cigna had been using a new pricing methodology which based payment on a percentage-share of what the member for a particular service Owed (called proportionate share analysis). A federal court in Texas found this practice was not only improper but amounted to a breach of fiduciary duty to the members/patients and the hospital, and awarded $13.6 million to the hospital. FIDUCIARY DUTY IT S CATCHING ON! DRAGU V. MOTION PICTURE INDUS. HEALTH PLAN FOR ACTIVE PARTICIPANTS After the Plan sponsor denied coverage for dental implants, the Plan Participant appealed, contending that the plain terms of the SPD did not exclude the installation of abutments and crowns. Instead, the Plan excluded the rehabilitation of existing prosthetic teeth. The Court found that the Plan Sponsor contravened the terms of the Plan by improperly denying coverage for the abutments and crowns and for reimbursing the Provider at a lesser rate. 6

7 FIDUCIARY DUTY IT S CATCHING ON! GUYAN INT L., INC. V. PROFESSIONAL BENEFITS ADM RS, INC. The 6th Circuit held that a TPA was a fiduciary under ERISA because it exercised control over plan assets. In this case, the TPA had control over where plan funds were deposited, when and how the funds were paid out, and the TPA had the authority to write checks from each of the plan accounts. FIDUCIARY DUTY IT S CATCHING ON! LIFECARE MGMT. SERVS., LLC V. INS. MGMT. ADM RS, INC. The ASA in this case granted the TPA the power to deny claims that the Plan Sponsor considered routine. As a result, the 5th Circuit concluded that the TPA s actions made it liable for having for having exercised discretionary authority in deny benefit claims. 7

8 FIDUCIARY DUTY IT S CATCHING ON! LITTLE RIVER BAND OF OTTAWA INDIANS, ET AL. V. BLUE CROSS BLUE SHIELD OF MICH. In this case, the Plan sued the TPA. The Plan claimed that BCBS of Mi had a fiduciary duty to ensure that the plan paid Medicare-Like Rates ( MLR ) for certain health services, and the TPA failed to do so. FIDUCIARY DUTY IT S CATCHING ON! MASON V. FED. EXPRESS CORP. In this case, the Court suspected that the Plan Sponsor hired the TPA to minimize benefits awards and thus had a significant conflict of interest in the appeals process. As a result, the Court ordered the TPA to pay benefits to the Plan Participant for the cost of treating his rare, autoimmune disease. 8

9 FIDUCIARY DUTY IT S CATCHING ON! PAC. SHORES HOSP. V. UNITED BEHAVIORAL HEALTH The Plan Sponsor refused to pay for more than three weeks of inpatient hospital treatment for anorexia based on the participant s medical history and condition. The Provider argued that the Plan Sponsor committed procedural irregularities in its evaluation of the Plan Participant s case by relying upon telephone conversations instead of hospital records. The Court agreed that the Plan Sponsor and the TPA failed to conduct a sufficiently thorough and accurate review of the benefits determination and ordered the Plan Sponsor to pay benefits. FIDUCIARY DUTY IT S CATCHING ON! ROHAN V. UNITEDHEALTHCARE INS. CO. In this case, the Court would not foreclose the possibility that a TPA may be considered a plan administrator where the facts demonstrate that the service provider exercised discretionary authority over administration of the plan and thus held a fiduciary duty to the plan and plan participants. 9

10 YOU SNOOZE YOU LOSE AETNA LIFE INSURANCE COMPANY V. METHODIST HOSPITALS OF DALLAS ROLAN V. NEW WEST HEALTH SERVICE MONTANILE V. BOARD OF TRUSTEES OF THE NATIONAL ELEVATOR INDUSTRY HEALTH BENEFIT PLAN YOU SNOOZE YOU LOSE AETNA LIFE INSURANCE COMPANY V. METHODIST HOSPITALS OF DALLAS Aetna ASO claimed the Texas Prompt Pay Act didn t apply since it wasn t a payer. The court held that ERISA does NOT preempt the Prompt Pay act, and that the TPA can indeed be held liable, since the TPA is the one responsible for the actual ministerial payment obligation. Even though the group funds claims, the TPA literally pays the claim. 10

11 YOU SNOOZE YOU LOSE ROLAN V. NEW WEST HEALTH SERVICE Lawsuit commenced, and then the defendant tried to remove it to federal court on the basis of ERISA preemption FOUR YEARS later. The court said, in a nutshell, you snooze, you lose (your rights). ERISA can be a great tool for a plan but it won t come to your rescue you have to be diligent. YOU SNOOZE YOU LOSE MONTANILE V. BOARD OF TRUSTEES OF THE NATIONAL ELEVATOR INDUSTRY HEALTH BENEFIT PLAN Plan participant and their attorney sought a reduction of the Plan's interest, but could not come to an agreement. The attorney then provided the Plan with a take it or leave it deal, advising that funds would be disbursed if their offer was not accepted, or suit was not filed. The Plan waited over 6 months to file suit and did not seek a restraining order to prevent further dissipation of the funds. The Supreme Court decided that the Plan could not assert a lien or recover against any settlement funds that had already been spent on 'non-traceable' assets. 11

12 TO ASSIGN OR NOT TO ASSIGN GREAT QUESTION! MEDICAL UNIVERSITY HOSP. AUTHORITY V. OCEANA RESORTS, LLC TRUEVIEW SURGERY CENTER V. ONESUBSEA LLC TO ASSIGN OR NOT TO ASSIGN GREAT QUESTION! MEDICAL UNIVERSITY HOSP. AUTHORITY V. OCEANA RESORTS, LLC The Plan had an anti-assignment clause but the patient signed the provider s form. the court agreed that anti-assignment MEANS anti-assignment. the provider s form said insurance policy, and the court said that a selffunded plan, by definition, is not an insurance policy, so it s inapplicable as an assignment. 12

13 TO ASSIGN OR NOT TO ASSIGN GREAT QUESTION! TRUEVIEW SURGERY CENTER V. ONESUBSEA LLC Plan had general and broad anti-assignment clause (said basically NO ASSIGNMENTS AT ALL) but court said that wasn t specific to medical providers Court indicated that it would have a different opinion if the Plan had mentioned providers of medical care, treatment or services in the prohibition on assignments. SPD broadly prohibited all assignments Not good enough ERISA MAN LIVES!?!? AIRTRAN AIRWAYS, INC. V. ELEM ROMANO WOODS DIALYSIS CENTER V. ADMIRAL LINEN SERVICE, INC. GOBEILLE V. LIBERTY MUTUAL INSURANCE CO. RUDEL V. HAWAII MANAGEMENT ALLIANCE ASSOCIATION 13

14 ERISA MAN LIVES!?!? AIRTRAN AIRWAYS, INC. V. ELEM Plan s lien was $130K. Member received two settlements, $25,000 and $500,000. Counsel attempted to conceal the existence of the larger settlement from the Plan, but disbursed funds before the Plan found out and filed suit. Remanded back to the district court in light of Montanile; we are waiting to see if active misconduct by the attorney will have any change on the outcome. ERISA MAN LIVES!?!? ROMANO WOODS DIALYSIS CENTER V. ADMIRAL LINEN SERVICE, INC. OON dialysis carve-out held to be perfectly OK since the plan had great language, reprice was based on strong data (not arbitrary), and the process didn t target ESRD. 14

15 ERISA MAN LIVES!?!? GOBEILLE V. LIBERTY MUTUAL INSURANCE CO. Vermont reporting law preempted by ERISA court said it would place an undue reporting burden on ERISA plans and somehow that was enough for preemption. ERISA MAN LIVES!?!? RUDEL V. HAWAII MANAGEMENT ALLIANCE ASSOCIATION Plan participants in Hawaii filed suit in state court to seek adjudication of the interests of private, self-funded ERISA plans. The Plans removed the cases to federal court and sought enforcement of their rights under ERISA. 15

16 ERISA MAN LIVES!?!? RUDEL V. HAWAII MANAGEMENT ALLIANCE ASSOCIATION The participant argued that the plans could not remove the cases to federal court because the federal question came in the form of a defense. Ultimately, the district court found in favor of the Plan, holding that adjudication of a subrogation interest does qualify for complete preemption under federal law. ERISA MAN IS DEAD... SELF-INSURANCE INSTITUTE OF AMERICA, INC. V. RICK SYNDER 16

17 ERISA MAN IS DEAD... SELF-INSURANCE INSTITUTE OF AMERICA, INC. V. RICK SYNDER Michigan law charges tax on all paid claims. SIIA argued that it unduly burdens ERISA plans, but 6th Circuit ultimately denied the challenge to the law s application to ERISA plans. Appeals and results to be discussed and next steps considered THE PRICE IS RIGHT GLENN MICHAEL DENNIS VS. PHC-MARTINSVILLE, INC. T/A MEMORIAL HOSPITAL OF MARTINSVILLE & HENRY COUNTY 17

18 THE PRICE IS RIGHT GLENN MICHAEL DENNIS VS. PHC-MARTINSVILLE, INC. T/A MEMORIAL HOSPITAL OF MARTINSVILLE & HENRY COUNTY OON claim, plan paid its share, and patient balance-billed for the rest. Hospital sued the patient for the balance, and the patient fought back. The court held that the hospital s charges were arbitrary it had to charge an amount based on what it normally accepts from other uninsured patients. 18

FIDUCIARY RESPONSIBILITY AND YOU. Tim Callender, The Phia Group

FIDUCIARY RESPONSIBILITY AND YOU Tim Callender, The Phia Group Innovation and Cost-Containment - In the Self-Funded Space - Presented By Tim Callender Vice President Sales & Marketing The Phia Group, LLC