The nine-year odyssey to get a health insurance claim paid – "as we enter the ninth year of the insurance company's failure to provide coverage to its insured" – in Butler v. United Healthcare, No 13-6466 (6th Cir., August 22, 2014), includes a helpful discussion, among other things, of the two different types of administrators that ERISA plans may have unfortunately, this distinction required the court to vacate a $99,000 statutory penalty against United Healthcare.
At the heart of the case is the effort of a husband to get United Healthcare to pay for his wife's inpatient rehabilitation for alcohol addiction. United resisted mightily including twice disregarding the district court's orders to undertake a "full and fair review" of the claim. Along the way, the insured had requested United to provide him a copy of its residential rehab guideline, a disclosure a plan administrator would be required to make.
But ERISA plans can have two types of administrators, and a convoluted way of determining whether there is one or two, and, if there are two, which is which, as the court explained. First, if the plan does not specify who its administrator is, the administrator by default is the plan sponsor, which is usually the employer. Second, ERISA plans can and often do have two types of administrators, a claims administrator and a plan administrator. A claims administrator is the entity that "administers claims for employee welfare benefit plans and has authority to grant or deny claims." The plan administrator is usually the "employer who adopted the benefit plan in question." And, as the court observed, "quite often, indeed, the claims administrator and the plan administrator are not the same."
The ERISA plan in question here did not specify who was the plan administrator, so by default the employer-purchaser of the plan became its "plan administrator." And since United was not the plan administrator, there was no requirement for it to disclose the requested guidelines at an earlier time and so the statutory penalties for the failure were vacated.
ERISA, specifically 29 U.S.C. 1022(b), requires that a summary plan description (SPD) be distributed to each participant in the plan and further that it identify "the name and address of the [plan] administrator[.]" But it is not at all unusual for an SPD to fail in this regard. Which can lead to confusion and to nine year odysseys to get a claim paid.
Robert L. Abell
www.RobertAbellLaw.com
