Getting the Medical Bills Paid

Many employers offer medical or health insurance coverage which are usually governed under the Employee Retirement Income Security Act. It is found in the United States Code beginning at 29 U.S.C. § 1001. For the most part, the statute, which is commonly known as ERISA, preempts or nullifies state law. ERISA claims involve this very lengthy and complicated statute with its regulations and case law.

ERISA only allows a recovery of the benefits that should have been received, and interest. If a lawsuit is filed, then a judge may also order attorney’s fees. Certain violations, such as failure to provide a summary plan description in a timely manner, or failure to provide a notice of COBRA rights for continued health insurance or medical benefit coverage, can each incur penalties under ERISA up to $110.00 per day. However, these penalties are only awarded under certain circumstances and may be only awarded by a federal court judge. Click here to read about penalties.

Under state law, a company’s breach of duty owed to an individual may involve damages that will include not only the benefits that should have been paid, but perhaps also mental anguish, pain and suffering, punitive damages and other types of consequential damages. Also under state law, the claimant or person seeking the benefits, may be entitled to a jury trial. The jury trial guarantees that individuals from the community will decide the case rather than one judge. Since ERISA preempts state law, this means that there may be no recovery for mental anguish, pain and suffering, punitive damages or any other extra contractual damages, other than interest. There is also no right to a jury trial. 

A health policy purchased apart from your employer, of course, is not going to be governed by ERISA. Neither are governmental plans, as defined by 29 U.S.C. § 1003(32), or church plans as defined in 29 U.S.C. § 1003(33). Such plans are governed by state law leaving the usual remedies of breach of contract, bad faith or perhaps fraud. Under non-ERISA policies, you may be able to recover mental anguish or punitive damages depending on the facts. Contact David P. Martin.

RECENT ERISA MEDICAL LAW NEWS

Plan Sponsors Can Amend a Plan to Strip Medical Benefits! The Eleventh Circuit recently explained, in a not for publication opinion, that plan sponsors have a free hand in amending the health benefit plan to eliminate or limit coverage in Chaudhry v. Neighborhood Health Partnership, Inc., 2006 U.S. App. LEXIS 10546, Case number No. 05-13146, (11th Cir. April 26, 2006). Basically, a plan sponsor can amend a plan to exclude or limit treatment that an individual is undergoing on a regular basis as long as it does so in a permissible manner. Chaudhry suffered from Kartagener’s Syndrome which required her to undergo daily chest physiotherapy treatment to prevent mucus build-up in her lungs. The HMO only agreed to pay for 60 visits, but the Florida Statewide Provider and Subscriber Assistance Panel directed the HMO to pay for all treatments. After losing this issue, the HMO amended the plan to limit payment for only 60 visits. The Eleventh Circuit stated that it was within its rights to do so. The other 305 chest physiotherapy treatments needed were not covered. This plan amendment was obviously specific to Chaudhry. This case illustrates the importance of regularly checking your health benefit plan to see if you truly have the coverage you need. If there has been a change, the change must have been done in a permissible manner following the procedures in place to amend the plan. The amendment of course will apply to claims made after the amendment takes place. If you come down with a serious illness the plan sponsor may amend the coverage to exclude care for your illness leaving you uncovered. Can a plan sponsor do that? This case says they can if they follow the rules.

COBRA Regulations Regarding Health Insurance and Continuation of Coverage

All employers maintaining a health insurance or medical benefits plan and which have 20 or more employees are regulated by a law known as COBRA. This stands for the Consolidated Omnibus Budget Reconciliation Act. Basically, when an employee has health or medical benefit coverage through a plan and then terminates employment unless the termination is for good cause, the employer is required to provide notice to the former employee of the right to elect COBRA coverage. The employee is supposed to be provided this notice within 30 days of termination or other qualifying event. Once notice is provided the employee can elect to continue to have health insurance but must pay 102% of the cost of the benefit to the employer. Payments must be made in a timely manner or that may also be grounds for termination of the COBRA health insurance benefit. Failure to provide this notice of the right to continue health insurance coverage can give rise to a claim for penalties up to $110.00 per day.