Tagged ‘Claims‘

Health Plan Identification Numbers (HPID): Large Group Health Plans Must be Obtained by November, 2014

Health Plan Identification Numbers Required by November 2014

Self-insured group health plans are required to obtain health plan identification numbers (HPID).  Health Plan Identification Numbers are required for each “controlling health plan” or CHP and may be used by a “subhealth plan” (SHP).  Under 45 CFR 162.103, a CHP is a plan that (i) controls its own business activities, actions or policies or (ii) is controlled by an entity that is not a health plan and, if it has an SHP, exercises sufficient control over the SHP to direct its business activities, actions or policies.  An SHP is a health plan whose business activities, actions or policies are directed by a CHP.  Most self-insured group health plans are likely to qualify as controlling health plans.

If all goes as planned, the use of standardized HPIDs will help health care providers to determine eligibility, process bills and perform other insurance-related tasks more efficiently by increasing automation and decreasing the time spent on interactions with health plans.   In addition to requiring business associates to refer to the HPID when performing certain tasks for a covered entity, the Department of Health and Human Services suggests that the HPID could be used by health plans on internal files and health insurance cards in order to facilitate the smooth processing of claims and detect fraud and abuse.

The deadline for large plans (those with annual cost of $5 million ore more) to apply for an HPID is November 5, 2014.  Small group health plans must apply for an HPID by November 5, 2015.

Fifth Circuit: De Novo Review for Breach of Fiduciary Duty Claims

As any first-year law student can attest, sometimes it’s all about the footnotes.   In this vein, the Fifth Circuit’s unpublished opinion in Futral v. Chastant is poised to become the latest case to boast a footnote likely to overshadow the holding.

Laurie Futral, the widow of a murdered dentist, claimed that she was entitled to receive benefits from the qualified plans sponsored by her husband’s dental practice.  Her brother-in-law, Paul Chastant, served as her husband’s executor and served as trustee of the qualified plans.  Futral filed suit against Chastant in order to obtain payment of the plan benefits.  During the course of litigation, Chastant became aware of allegations that Futral was involved in her husband’s death and asserted that payment was not permissible under Louisiana’s Slayer Statute.  Chastant used approximately $80,000 in plan assets to pay for attorney’s fees relating to the litigation.  After a jury determined that Futral did not play a part in the murder, Chastant released the plan benefits to Futral.  Shortly thereafter, Futral brought a claim for breach of fiduciary duty against Chastant and sought to recover the amount of the plan assets which he spent in defending against her claim for benefits.  Not surprisingly, the Fifth Circuit held that Chastant did not breach his fiduciary duty simply by “us[ing] plan funds to defend against a suit seeking to compel disbursement to a potentially ineligible beneficiary.”  The Court did draw the line at authorizing Chastant to obtain additional attorney’s fees directly from Futral.  The Court noted that while the plan documents authorized payment of legal expenses from the corpus of the plans in some situations, they did not extend to authorizing recovery from a beneficiary after the plans’ funds had been disbursed.

While interesting, this result is not the real headline.  Instead, in a footnote, the Court explained that it declined to review Chastant’s actions under the “abuse of discretion” standard articulated by Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989).  The Court conceded that, under Firestone, the application of an abuse of discretion standard would be proper in reviewing a challenge to a denial of benefits under ERISA Section 502(a)(1)(B).  The Court rejected Chastant’s argument that his decision to pay the attorney’s fees fell into the same category and instead applied the less deferential standard of de novo review.

It’s a fair bet that, sometime in the near future, we’ll see further discussion of the final words of the Fifth Circuit’s footnote:  “Because this is a suit for a breach of fiduciary duty rather than a suit for denial of benefits, Firestone does not apply and the proper standard of review is de novo.”



Tenth Circuit Upholds Plan’s Decision to Deny Disability Benefits for Employment-Related Stress

Fite v. Bayer Corporation, No. 13-7027 (10th Cir. 2014).
Read the case.

Bayer Corporation maintained a short-term disability plan. The plan capped benefits at 26 weeks and explicitly excluded coverage for “disabilities resulting from … [e]mployment-related mental or emotional disabilities.” The plan’s third-party administrator was responsible for performing the initial benefits determination and the first-level review of denials of benefits. Bayer’s benefits committee retained responsibility for deciding final appeals.

Margie Fite took a leave of absence from her position as a pharmaceutical representative with Bayer Corporation. In June 2009 she applied for and was granted short-term disability benefits on the basis of a psychologist’s diagnosis of major depressive disorder and generalized anxiety disorder. Read More →