Few Self-Insured Plans Will Escape Paying Reinsurance Fees

Only self-insured plans that completely self-administer claims payments and plan operations will avoid paying onerous transitional reinsurance fees. If a self-insured health plan does no more than determine eligibility, it will have to pay, according to Jeffrey Endick, an attorney with Slevin & Hart in Washington D.C.

An exception exists to the onerous fee $63 per-member-per-year fee: Self-insured plans that virtually completely self-administer claims payments and plan operations are exempt from paying it. But it appears few will qualify.

According to Endick, self-insured plans will lose the exemption if the plan uses a TPA for even one of four core claim-paying and adjudication functions. These include: (1) repricing claims; (2) sending out explanations of benefits; (3) cutting checks for providers; and (4) negotiating provider discounts.

Nov. 15 is the deadline for submitting information and scheduling payments for the fee. The payments are not due on Nov. 15, but employers must upload their information by that date.

In accord with that deadline, the Centers for Medicare and Medicaid Services published a 64-page manual to help insurers, third-party administrators and employers fill out their submissions. A separate set of instructions tells employers how to facilitate creation of the data to be submitted. CMS told the public that submission forms will be available on www.pay.gov for program enrollment and contributions data on Oct. 24.

The transitional fee must be paid by all health plans in order to help insurers pay for the high-cost individuals that they must cover because of health care reform’s guaranteed-issue and no-rescission rules. All health insurers and third-party administrators on behalf of self-insured group health plans must pay into the fund.

“Reporting entities” will register on www.pay.gov on or before Nov 15, 2014 for the 2014 benefit year’s annual enrollment, CMS said.

Employers may split the transitional reinsurance fee into two parts: they may submit an initial payment of $52.50 per covered life by Jan. 15, 2015 and a second payment of $10.50 per covered life by Nov. 15, 2015. They may also pay the entire $63.00 per covered life on or before Jan. 15, 2015.

The TR payment for 2015 becomes $44; and insurers and plans can make an initial payment of $33 in and subsequent payment of $11. The amount of the 2016 fee has not been made public yet.

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Plaintiff’s Attorney Fees Denied — Filing Of Lawsuit Was Not Reason Why Benefits Were Granted

You already know that in ERISA cases a court may, in its discretion, award attorney fees if a party achieved “some degree of success on the merits.”

Is the mere filing of a lawsuit,  before Plaintiff’s ERISA-governed disability benefit claim is granted, sufficient to win an award attorney fees?  NO.

Here’s the case of Koloff v. MetLife Ins. Co, 2014 WL 3420990 (E. D. Cal. July 14, 2014) [PDF].

FACTS: Koloff brought suit seeking disability benefits under an ERISA-governed plan. The Court dismissed the case (without prejudice) because Koloff had failed to exhaust administrative remedies. On December 5, 2013, MetLife informed Plaintiff’s counsel it was sending payment on benefits and asked for information to the net amounts, because of the offset for Social Security benefits. On December 17, 2013, Koloff brought a second lawsuit seeking disability benefits. On December 20, 2013, MetLife sent Koloff the letter approving her disability claim.

Koloff then moved for attorney fees, contending she achieved “some success on the merits.”

DISTRICT COURT HELD:  Plaintiff’s Motion for Attorney Fees Denied.

  1. The Plaintiff’s attorney’s time records strongly suggest that “he knew of MetLife’s intention to approve the claim prior to the filing of the complaint on December 17, 2013….”  The administrative record corroborates this, noting the December 5, 2013 conversation in which MetLife advised that it was “getting a check out.”  Op. at 7.
  2. “[T]he Court finds MetLife made the decision to approve plaintiff’s long term disability benefits by December 5, 2013 and, more importantly, made clear to plaintiff’s counsel that the only thing to do was determine the net amount to be paid which would occur once counsel provided MetLife the SSDI and EDD [offset] figures.”  Op. at 8.
  3. “Because there was no dispute as to the merits of the action before the complaint was filed, Plaintiff has shown no “injury in fact.”  Op. at 8-9.
  4. Under ERISA, “fees and costs may be awarded to any party ‘who has achieved some degree of success on the merits.’”  A claimant “does not satisfy that requirement by achieving ‘trivial success on the merits’ or a ‘purely procedural victory[.]’”  Op. at 10.
  5. Plaintiff’s counsel should not get attorney fees in her first lawsuit, which was dismissed without prejudice. “[W]hen an individual fails to exhaust administrative remedies, ‘the proper remedy is dismissal without prejudice.’” The dismissal here was not analogous to a remand.  Op. at 10.
  6. “[F]ees expended during administrative processes are not recoverable.”  Op. at 12, Fn. 13
  7. “T]he Ninth Circuit has not yet determined whether the catalyst theory [for seeking attorney fees] is viable in an ERISA action in light of Buckhannon[.]”  Op. at 12.
  8. [T]he facts do not demonstrate that the suit was [a catalyst] or linked to the decision to approve plaintiff’s benefits….Plaintiff’s counsel was informed that benefits would be paid before the litigation was initiated.”  Op. at 13-14.
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