HHS Issues Request for Information on Essential Health Benefits

January 18, 2023

On December 2, 2022, HHS published a request for information (RFI) soliciting public comments on various essential health benefits (EHB) issues under the ACA. This is the first time HHS has requested comments on updating the EHBs since it became effective in 2014. As health insurance needs have changed, such as the increase in the utilization of telehealth and awareness of mental health and substance use disorder services benefits in recent years, this RFI will assist the agency in gauging how current EHB requirements should be updated.

The ACA requires non-grandfathered fully insured small group plans (and individual plans) to cover all 10 categories of standard EHBs. While self-insured plans and fully insured large plans are not required to cover EHBs, the ACA requirements on the prohibition on annual or lifetime dollar limits and maximum out-of-pocket limits apply to plans’ EHBs. States generally select their own EHB-benchmark plans, including covered benefits and limitations on coverage, which serve as a reference plan for benefits considered to be EHBs in the state. Self-insured plans define EHBs by selecting any state’s EHB-benchmark plan or a Federal Employees Health Benefits Program benchmark plan. Employers with insured plans must use the benchmark plan of employer's contract/situs state.

The 10 categories of EHBs defined currently by HHS:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services (including behavioral health treatment)
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services (including oral and vision care)

In the RFI, HHS requested comments, including to what extent state EHB-benchmark plan documents should include additional guidance and descriptions (e.g., “medically necessary transportation” vs. “ground, water and air ambulance”). Moreover, the RFI asks for public input regarding any barriers to accessing services due to coverage or cost, including mental health, behavioral health, and substance use disorders, and to what extent telehealth impacts access. The RFI also asks questions about prescription drug categories, whether the EHB definition needs to be updated to account for changes in medical evidence or scientific advancement (including to advance health equity issues), how EHBs could be modified to address access gaps and the impact an expanded EHB definition has on cost.

Employers should be aware of this development. Those wishing to submit comments must do so by January 31, 2023, in accordance with the RFI instructions.

HHS: Request for Information; Essential Health Benefit »

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Ninth Circuit Rules ERISA Benefit Denial Review Must Be Based on Administrative Record

January 18, 2023

On November 21, 2022, in Collier v. Lincoln Life Assurance Company of Boston, the Ninth Circuit reversed the district court’s affirmance of an ERISA plan’s denial of LTD benefits. In the opinion, the Ninth Circuit emphasized that review of an ERISA plan administrator’s denial of benefits must be based upon the reasons reflected in the administrative record and not rationales subsequently introduced.

In this case, plaintiff Vicki Collier was an insurance sales agent who began employment with the Automobile Club of Southern California (AAA) in 2013. She suffered from ongoing pain in her back and upper extremities, which prevented her from being able to type and sit for extended periods of time. Eventually, she was diagnosed with mobility impairments and tried various treatments, including surgery, to address her symptoms. In 2018, she stopped working, citing her persistent pain.

In 2019, Collier submitted a claim for benefits to Lincoln Life Assurance Company of Boston (Lincoln), the insurer of the ERISA LTD benefit plan sponsored by AAA. Lincoln denied her claim based upon a reviewing physician’s report that she did not meet the plan’s definition of disability. The denial letter said nothing about Collier's credibility or her failure to submit objective medical evidence as the basis for denying benefits.

Collier timely appealed the denial and submitted additional medical records to support her claim. As part of its review, Lincoln scheduled an independent medical examination for Collier. The physician who conducted the exam concluded that Collier could work full-time, with certain limitations. Lincoln then denied Collier’s appeal, citing a lack of medical documentation to prove that her impairments and symptoms remained of such severity, frequency and duration that she was unable to perform the duties of her occupation (and thus did not meet the plan’s definition of disability).

Collier then filed a lawsuit for judicial review of the denial of her claim for ERISA LTD plan benefits. In trial briefs, Lincoln argued, for the first time, that Collier was not credible and that her doctors relied upon her subjective reports of pain rather than objective evidence of her disability. Collier asserted that the district court should reject Lincoln’s credibility and objective evidence arguments because Lincoln did not present those arguments in its denial letters. The district court affirmed Lincoln’s denial of Collier’s claim, relying upon the new reasons Lincoln set forth during the litigation.

On appellate review, the Ninth Circuit held that when a district court reviews a denial of ERISA benefits de novo (i.e., without deference to the plan administrator’s conclusions), it examines the administrative record to determine whether the administrator erred in denying benefits. Therefore, the district court’s task was to determine whether Lincoln’s decision was supported by the plan’s administrative record and not to engage in a new determination of whether Collier was disabled based upon reasons introduced in litigation that Collier had no opportunity to respond to during the administrative process. The Ninth Circuit noted that a contrary conclusion would deny Collier her statutory right under ERISA to “full and fair review” of her claim denial. Accordingly, the Ninth Circuit reversed the district court’s ruling and remanded the case for reconsideration.

The decision is important because it clarifies the scope of a trial court’s authority in reviewing an ERISA plan’s denial of benefits. For plan administrators, the case is a reminder of the importance of adhering to ERISA’s claim review requirements and procedures in order to provide impartial and consistent treatment of benefit claims. Plan administrators should carefully and thoroughly review each claim and ensure a claim denial notice includes the specific reason(s) for the denial and a description and explanation of additional material or information necessary to perfect the claim.

Collier v. Lincoln Life Assurance Company of Boston »

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Congress Passes Federal Spending Bill with Important Employee Benefit Provisions

January 04, 2023

On December 29, 2022, President Biden signed the Consolidated Appropriations Act, 2023 (CAA 2023) into law. The $1.7 trillion-dollar annual federal spending bill includes several bipartisan provisions that affect group health plans and adopts important retirement plan proposals known as SECURE 2.0.

The CAA 2023 provisions applicable to group health plans include the following:

  • Telehealth Relief Extension. The CAA 2023 provides a two-year extension of relief that allows high deductible health plans (HDHPs) to provide first-dollar telehealth coverage without negatively impacting HSA eligibility. Generally, coverage provided without cost-sharing before the HDHP statutory minimum deductible is met is considered impermissible coverage for HSA eligibility purposes. However, under the CARES Act COVID-19 legislation from 2020, telehealth services could be treated as disregarded coverage (i.e., not causing a loss of HSA eligibility) for plan years beginning on or before December 31, 2021. The Consolidated Appropriates Act of 2022 (CAA 2022) included a temporary extension of this relief from April 1, 2022, to December 31, 2022. The CAA 2023 further extends the optional telehealth relief for plan years beginning after December 31, 2022, and before January 1, 2025. 
  • Sunset of the MHPAEA Opt-Out for Self-Funded Non-Federal Governmental Plans. The CAA 2023 eliminates the annual opt-out provision from the Mental Health Parity and Addiction Equity Act (MHPAEA) currently available to many state and local governmental self-funded group health plans. Generally, new opt-out elections will not be permitted after the enactment of CAA 2023, and existing elections that are expiring 180 days or later after such enactment will not be permitted to be renewed. A limited exception applies for certain collectively bargained plans. 
  • Grants to Support MHPAEA Enforcement. The CAA 2023 authorizes five years of CMS grants totaling $10,000,000 annually to be awarded among states that agree to request and review health insurers’ non-quantitative treatment limitation comparative analyses required under the CAA 2021. The purpose of the grants is to increase MHPAEA enforcement in fully insured group and individual health plans. Accordingly, MHPAEA enforcement is expected to remain a priority of state and federal regulatory authorities.

The inclusion of the SECURE 2.0 Act in the CAA 2023 significantly impacts retirement plans. The SECURE 2.0 Act follows the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 and incorporates aspects of recent House and Senate bills. A primary goal of the SECURE 2.0 Act is to expand employee access to retirement plans and encourage greater savings. Noteworthy SECURE 2.0 Act provisions include the following:

  • Automatic Enrollment (Section 101). Effective for plan years beginning in 2025, most new 401(k) and 403(b) plans would be required to automatically enroll participants upon their becoming eligible. (Employees may affirmatively opt out.) The initial automatic enrollment deferral rate is at least 3% but not more than 10%. Each year thereafter, that amount is increased by 1% until it reaches at least 10%, but not more than 15%. All current 401(k) and 403(b) plans are grandfathered. There is an exception for small businesses with 10 or fewer employees, new businesses (i.e., in existence less than three years), church plans and governmental plans.
  • Increase in Age for Required Minimum Distributions (Section 107). The required minimum distribution age will increase to 73 for a participant who attains age 72 after December 31, 2022, and age 73 before January 1, 2033, and to 75 for a participant who attains age 74 after December 31, 2032. (Under current law, as established by the SECURE Act 2019, participants are generally required to begin taking distributions from their retirement plans at age 72.) The provision is effective for distributions made after December 31, 2022, for participants who attain age 72 after this date.
  • Greater Catch-Up Contribution Limit for Participants Ages 60 through 63 (Section 109). Participants aged 50 or older are currently allowed to make a catch-up contribution (i.e., a contribution in excess of the otherwise applicable deferral limit) up to the annual indexed amount. The 2022 limit on catch-up contributions is $6,500 ($3,000 for SIMPLE plans). Under SECURE 2.0, for participants who have attained ages 60, 61, 62 and 63, these limits increase in 2025 to the greater of $10,000 or 50% more than the regular catch-up amount for non-SIMPLE plans and the greater of $5,000 or 50% more than the regular catch-up amount for SIMPLE plans. The increased amounts are indexed for inflation after 2025.
  • Further Expansion of Part-Time Worker Eligibility (Section 125). The SECURE Act of 2019 requires employers to allow long-term, part-time workers to participate in the employers’ 401(k) plans if they have either completed one year of service (with 1,000 hours of service) or three consecutive years of service (with at least 500 hours of service). SECURE 2.0 reduces the three-year rule to two years, effective for plan years beginning after December 31, 2024. Additionally, these long-term part-time coverage rules are extended to 403(b) plans that are subject to ERISA.

We will continue to review and report on the CAA 2023 in upcoming editions of Compliance Corner. Please also register for our upcoming Get Wise Wednesday webinar on January 18, 2023, at 2:00 p.m. CT, for a comprehensive discussion on the benefits-related provisions in the CAA 2023.

Read our full Washington Update article here.

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Departments Provide Prescription Drug Data Collection Enforcement Relief

January 04, 2023

On December 23, 2022, the DOL, HHS and IRS (the departments) provided relief for employer plan sponsors regarding the CAA 2021 prescription drug data collection (RxDC) reporting requirements. Specifically, for the 2020 and 2021 data submissions that were due by December 27, 2022, the departments provided a submission grace period through January 31, 2023, and will not consider a plan to be out of compliance with the requirements provided that a good faith submission of 2020 and 2021 data is made on or before that date. Additionally, the departments will not take enforcement action with respect to any plan that uses a good faith, reasonable interpretation of the regulations and the RxDC Reporting Instructions in making its submission. Future reports will be due on June 1 following the data year. For example, the 2022 report will be due June 1, 2023.

The guidance provided the following clarifications and flexibilities with respect to reporting requirements for the 2020 and 2021 data:

  • Multiple reporting entities can submit the same data file type on behalf of the same plan or issuer, rather than consolidating all the plan’s or issuer’s data into a single data file for each type of data. This is a welcome relief for employers as some employers with more than one TPA or issuer have struggled to coordinate and compile the data from multiple entities into a single data file.
  • Certain group health plans may email premium and life-years data instead of submitting it to the Health Insurance Oversight System (HIOS). Though plans and issuers were required to submit information using the HIOS RxDC module, if a group health plan or its reporting entity is submitting only the plan list, premium and life-years data, and narrative response and is not submitting any other data, it may submit the file by email to RxDCsubmissions@cms.hhs.gov instead of submitting in HIOS. In the email, it must include the plan list file, premium and life-years data (data file D1) and a narrative response. The submission may include optional supplemental documents. The name of each file should include the reference year of the submission, the plan list or data file type (e.g., P2, D1) and the name of the group health plan sponsor.
  • Same reporting entity may make multiple submissions. The new guidance clarifies that when a reporting entity submits data on behalf of more than one plan or issuer for a reference year (calendar year), the reporting entity may create more than one submission for that reference year, instead of including the data of all clients within a single set of plan lists and data files for the year.
  • Optional to report the amounts not applied to the deductible or out-of-pocket maximum. Reporting entities are not required to report a value for “Amounts not applied to the deductible or out-of-pocket maximum,” and the “Rx Amounts not applied to the deductible or out-of-pocket maximum.”
  • Reporting on vaccines is optional. Plans and issuers were required to report information on drug names and codes, including National Drug Codes for vaccines. However, the guidance makes vaccine reporting optional.
  • Aggregation restriction is suspended. A reporting entity (e.g., issuer) can aggregate at a less granular level than the level used by the reporting entity that is submitting the total annual spending data.

With this relief, employers should review the guidance, particularly the latest clarifications and flexibilities with respect to reporting requirements, and work with their carriers, TPAs, PBMs and other vendors to ensure filings are completed by January 31, 2023.

For background of the RxDC reporting requirement, see the articles published in the December 7, 2021, and September 13, 2022, editions of Compliance Corner.

FAQ About ACA and CAA, 2021 Part 56 »

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The Departments Update 2023 Independent Dispute Resolution Process Fee Guidance

January 04, 2023

On December 23, 2022, the Departments of Health and Human Services (HHS), Labor and the Treasury (collectively, the departments) published an amendment to the Calendar Year 2023 Fee Guidance for the Federal Independent Resolution Process under the No Surprises Act, which was previously published October 31, 2022. We covered this original guidance in our November 8, 2022, edition of Compliance Corner.

The original guidance provides information on the federal independent dispute resolution (IDR) process, which includes information for group health plans and insurers who are seeking to resolve a payment claim for items and services covered by the surprise billing protections under the No Surprises Act (NSA) of the Consolidated Appropriations Act, 2021 (CAA, 2021). Under the rules, each party must pay a non-refundable administrative fee for participating in the federal IDR process. The administrative fee is established annually to offset the estimated costs to the departments to carry out the federal IDR process for the year.

The 2023 guidance originally stated the administrative fee would remain $50 per participating party. This amendment increases the 2023 fee to $350 per party for disputes initiated during the 2023 calendar year. The rationale for the increase is that a significant backlog of disputes is expected to grow in 2023. The departments have engaged a contractor and government staff to conduct pre-eligibility reviews, which will come at an increased cost to the federal IDR process. The amended guidance also restates but does not change, the allowable ranges for certified IDR entity fees related to determinations in 2023, which remains $200-$700 for single determinations, or $268-$938 for batched determinations, unless otherwise approved by the departments.

Employers that sponsor group health plans, particularly those that sponsor self-insured plans, should be aware of the updated federal IDR process guidance document.

HHS Updated IDR Fee Guidance »

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IRS Issues Notice for Calculating Qualifying Payment Amounts in 2023

January 04, 2023

On December 20, 2022, the IRS issued IRS Notice 2023-04, which describes the indexing factor to calculate the qualifying payment amount (QPA) for items and services furnished in 2023 under the No Surprises Act (NSA). As a refresher, the NSA, in part, provides protections for individuals from surprise bills for certain out-of-network emergency and non-emergency services. The guidance in Notice 2023-04 is used to calculate the QPA when a health plan does not have sufficient information to calculate the QPA; it increases the median contracted rates from 2019 by the annual factor. For 2023, the percentage increase from 2022 is 1.0768582128.

Although this guidance may not directly affect employers, they should be aware of this update and work with their insurers or TPAs to prepare to respond to potential surprise medical billing claims from plan participants. Additional information on QPA calculations and background can be found in our March 29, 2022, Compliance Corner article.

IRS Notice 2023-04 »

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Congress Passes Respect for Marriage Act

December 20, 2022

Congress recently passed the Respect for Marriage Act (RMA), which continues protections extended to same-sex and interracial marriages and repeals a provision of the Defense of Marriage Act (DOMA). DOMA contained a provision that stated that it did not require states to recognize same-sex marriage if that marriage was entered into in another state or treated as valid under other states’ laws. The RMA repeals that provision and prohibits states from denying the full faith and credit to any public act, record, or judicial proceeding of any other state pertaining to a marriage between two people on the basis of the sex, race, ethnicity or national origin of those people. In addition, a state may not deny a right or claim arising from such a marriage on the basis that such marriage would not be recognized under the law of that state on the basis of the sex, race, ethnicity, or national origin of those individuals. RMA also states that federal law recognizes any marriage between two people that is valid in the state into which it is entered.

The RMA does not require states to perform same-sex or interracial marriages. It explicitly states that it does not abrogate religious liberty or conscience protections that are otherwise available to individuals or organizations under the Constitution or federal law. The RMA does require states to recognize legal marriages performed in the past and in states where such marriages are legal. Accordingly, it does provide some certainty about this issue where recent Supreme Court opinions called it into question. The Dobbs case concerned abortion rights (see our article on the Dobbs opinion in the July 6, 2022 edition of Compliance Corner), but in a concurring opinion, Justice Thomas called for a re-examination of same-sex marriage using the same analytical framework used to overrule the case that provided for a right to abortion. The RMA is a response to that concurring opinion.

The direct impact of this decision on benefits is unknown at this time, as there has not been any regulatory guidance or amendments made to the current regulation in response to this statute. However, plan administrators may use this opportunity to review their plan documents and the definition of spouse in those documents, considering this federal recognition of same-sex marriage.

Respect for Marriage Act »

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HHS Proposes Rule on Confidentiality of Substance Use Disorder Patient Records

December 06, 2022

On November 28, 2022, the Department of Health and Human Services (HHS) released a Notice of Proposed Rulemaking for changes to the Confidentiality of Substance Use Disorder (SUD) Patient Records under 42 CFR Part 2 (referred to as “Part 2”). The proposed rules are intended to increase coordination among providers in treatment for substance use challenges and increase patient protections from unauthorized record disclosures. Note that Part 2 only applies to SUD treatment records from certain types of federally assisted programs, known as “Part 2 programs.”

Part 2 currently imposes different requirements for protected SUD treatment records than under the HIPAA Privacy Rule. This discrepancy can create barriers to information sharing among healthcare providers and compliance challenges for regulated entities. The CARES Act addressed this by bringing Part 2 protections into greater alignment with the HIPAA Privacy Rule on uses and disclosures for treatment, payment and healthcare operations. Secretary Xavier Becerra described the importance of the changes, noting “[t]his proposed rule would improve coordination of care for patients receiving treatment while strengthening critical privacy protections to help ensure individuals do not forego life-saving care due to concerns about records disclosure.”

With some exceptions, Part 2 currently requires SUD treatment providers to obtain written consent for use or disclosure of patient-identifying information and give notice of Part 2 protections (including requiring consent to redisclose) to recipients of Part 2 records. Notably, in the proposed rules under the CARES Act, once prior written consent has been obtained, the records described in the consent may be used or disclosed by a covered entity or business associate for treatment, payment and healthcare operations as permitted under HIPAA regulations, including redisclosure as permitted by HIPAA.

The Proposed Rulemaking changes also include:

  • New patient rights under Part 2 to obtain an accounting of disclosures and to request restrictions on certain disclosures, as also granted by the HIPAA Privacy Rule. This includes self-pay patients’ right to restrict disclosures to health plans.
  • Expanded prohibitions on the use and disclosure of Part 2 records in civil, criminal, administrative and legislative proceedings.
  • New HHS enforcement authority, including the imposition of civil monetary penalties for violations of Part 2.
  • Updated breach notification requirements to HHS and affected patients that follow the HIPAA Breach Notification Rule.
  • Updated HIPAA Privacy Rule Notice of Privacy Practices requirements to address uses and disclosures of Part 2 records and individual rights with respect to those records.

The current Part 2 rules remain in effect while HHS completes the rulemaking process. Group health plan sponsors should be aware of the proposed rules and consult with their insurers or service providers regarding implementation of anticipated changes to Part 2 record protections. Public comments on the proposed rules can be submitted through January 31, 2023. We will continue to report on further major developments in Compliance Corner.

Notice of Proposed Rulemaking on Confidentiality of Substance Use Disorder Patient Records »

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HHS Issues HIPAA Guidance on Use of Online Tracking Technologies

December 06, 2022

On December 1, 2022, the Office for Civil Rights (OCR) at the HHS issued a bulletin to remind HIPAA covered entities and business associates (“regulated entities”) of their obligations when using online tracking technologies. The bulletin emphases that regulated entities must disclose PHI only as expressly permitted or required under the HIPAA Privacy Rule.

These online tracking technologies (e.g., cookies), used by third-party tracking technologies like Google Analytics or Meta Pixel, collect and analyze information about how internet users are interacting with a regulated entity’s website or mobile application. HHS indicated in their press release that some regulated entities regularly share electronic protected health information (ePHI) with third-party online tracking technology vendors, and some may be doing so in a way that violates the HIPAA Rules. The HIPAA Rules apply when the information that regulated entities collect through tracking technologies or disclose to tracking technology vendors includes ePHI. Regulated entities are not permitted to use tracking technologies in a manner that would result in impermissible disclosures of ePHI to tracking technology vendors or any other violations of the HIPAA Rules.

The collected information through tracking technologies from websites or mobile apps might include an individual’s medical record number, home or email address, or dates of appointments, as well as an individual’s IP address or geographic location, medical device IDs or any unique identifying code. The bulletin clarifies that all such individually identifiable health information collected on a regulated entity’s website or mobile app is protected health information (PHI), even if the individual does not have an existing relationship with the regulated entity and even if the individually identifiable health information, such as IP address or geographic location, does not include specific treatment or billing information like dates and types of healthcare services.

The HIPAA Privacy Rule protects all “individually identifiable health information” held or transmitted by a covered entity or its business associate, in any form or media, whether electronic, paper or oral. PHI is information, including demographic data that identifies the individual or for which there is a reasonable basis to believe it can be used to identify the individual. HIPAA covered entities include health plans, clearinghouses and certain healthcare providers.

Though the bulletin addresses many issues that apply to providers and insurance companies, employers should conduct routine risk assessments and review their HIPAA obligations with their advisers and outside counsel when developing a comprehensive strategy for adhering to HIPAA’s privacy, security and breach response requirements incorporating this latest bulletin on online tracking technologies.

HHS OCR Bulletin »
HHS Press Release »

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Federal Court Finds Employer on the Hook for TPA’s Misdirected COBRA Notice

November 08, 2022

On September 22, 2022, in Howard v. Ivy Creek of Tallapoosa, LLC et al., the US District Court for the Middle District of Alabama ruled that a delegation of COBRA notice obligations to a third-party administrator (TPA) did not absolve the employer of COBRA notice liability. The plaintiff, Pamela Howard, sued her former employer Ivy Creek of Tallapoosa (Ivy Creek) and Ivy Creek’s COBRA TPA, UMR Inc., alleging failure to provide a COBRA election notice. Howard brought a second claim against Ivy Creek under ERISA for failure to provide requested plan documents.

Ivy Creek maintained a self-insured medical plan for which it served as both plan sponsor and plan administrator. UMR was the TPA for the plan under an administrative service agreement with Ivy Creek, which included the responsibility of handling claims and issuing COBRA continuation notices. Howard worked for Ivy Creek as a nursing assistant from March 2015 until March 2019, when she suffered a debilitating aneurysm. In June 2019, Ivy Creek notified Howard by letter that she had been terminated after exhausting her medical leave. The letter also indicated that she would be provided COBRA election notices for continuation of her dental and medical coverages. Howard was timely provided the COBRA election notice for dental coverage but not for her medical coverage. The medical coverage COBRA election notice was mailed by UMR to Howard’s former residential address. The notice was returned to UMR as undeliverable, but UMR did not alert Ivy Creek of the delivery problem. Several months later, Howard sent requests to Ivy Creek for information on her medical COBRA continuation rights. She also requested plan documents through her legal counsel. These requests were ignored, and the lawsuit followed.

In addressing the COBRA claim, the court began with the premise that a plan administrator (typically, the employer) must be able to prove a good faith effort was made to provide the COBRA election notice, although proof of receipt is not required. Howard claimed Ivy Creek and UMR violated COBRA by failing to mail her election notice to her last-known address — the same address to which Ivy Creek mailed the employment termination letter and dental COBRA election notice. Ivy Creek disclaimed liability because it contracted with UMR to provide medical COBRA election notices. The court found such delegation of a ministerial task does not absolve Ivy Creek of COBRA liability as the plan administrator.

As to UMR, the court found its failure to provide Howard with the medical COBRA election notice was a direct result of Ivy Creek’s failure to notify UMR of Ms. Howard’s updated address. Under the administrative services agreement, Ivy Creek was responsible for notifying UMR of address changes. Moreover, the court found UMR owed no fiduciary duty to Howard and held no liability under the COBRA statute, even though it may have breached its contractual agreement with Ivy Creek by not communicating that the notice was returned as undeliverable.

In addressing the claim for failure to provide plan documents, the court began with the premise that ERISA requires plan administrators to disclose certain plan documents upon “the written request of any participant or beneficiary.” A plan administrator who fails to make a required disclosure to a participant or beneficiary within 30 days may be liable for penalties up to $110 per day. Participants include former employees with “a colorable claim to vested benefits.” The court found that Howard, a former employee who alleges she would have received COBRA coverage but for her employer’s failure to provide the required notice, was an ERISA participant entitled to plan documents.

The Howard case serves as another important reminder for employers to review their COBRA notice procedures, whether that means internal procedures or those followed by a TPA. If a former employee (or other COBRA-qualified beneficiary) sues for failure to offer COBRA coverage, most courts have held that the plan administrator (typically, the employer) has the burden of proving a good faith effort was made to provide the election notice. To that end, employers should adopt reliable procedures for ensuring TPAs are timely notified of employee address changes. This case also serves as a good reminder for ERISA plan administrators to have adequate procedures in place to respond to plan document requests timely and completely.

Howard v. Ivy Creek of Tallapoosa, LLC et al. »

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