Litigation Risk for Sponsors of Self-Insured Medical Plans

Out-of network medical providers are winning judgments against self-insured medical plan sponsors and their plan administrators related to reimbursement rates for services that the providers performed for plan participants. The potential risk for sponsors of self-insured plans could be significant. In one instance, a court awarded a provider group more than $13 million.

Advanced Planning

There are several actions that you should take immediately to minimize your risk:

  • Include a legally enforceable non-assignment of benefits clause in your plan document and summary plan description
  • Provide for a time limit under which a participant may bring a suit for a claim in your plan document and summary plan description
  • Delegate final claims adjudication responsibility to your third-party administrator in the services agreement and in practice
  • Ensure that your ERISA plan documents and summary plan descriptions are up-to-date and well-organized

When You Receive a Letter

Do not panic if you receive a demand letter from an out-of-network provider’s counsel. Instead:

  • Immediately forward the letter to your benefits counsel
  • Contact your third-party administrator to determine the status of the claim
  • Gather the appropriate ERISA documents to respond to the demand letter
  • Have your benefits counsel respond to the letter and forward the appropriate documents

Stevens & Lee’s employee benefits group has the experience and expertise to assist you in all phases of the process. We have been through this process multiple times and we can explain the value of both the advanced planning as well as the post-letter processes and help you minimize this risk related to your self-insured plan.

For more information regarding this client alert, please contact Charles C. Scheim at 610.478.2282 or the Stevens & Lee attorney with whom you normally consult.

This News Alert has been prepared for informational purposes only and should not be construed as, and does not constitute, legal advice on any specific matter. For more information, please see the disclaimer.