It’s a well known fact among workers’ compensation attorneys that employer group health plans frequently pay medical claims that probably should have been paid by the comp carrier. This shift in liability is not always simply a case of money being moved from one pocket to another.
In many cases employer self-funded group health plans are paying claims that should be paid by the workers’ compensation insurance they have purchased (in other words, the employer is self-insured on the health plan, but has insurance coverage on the comp claim). And then there are the cases where the comp claim is on a dependent, such that the employer’s group health plan is paying expenses incurred by a non-employee injured on some other employer’s work site.
Here’s an insider’s look into what is going on in this cost-shifting war.
When an employer files a workers compensation claim which is denied, the comp carrier will send a denial letter. That denial letter will often plumply suggest that the employee file on whatever group health insurance may be available. Now you probably realize that the health plan is a payer of first resort. I mean by this that, once the employee submits the denial letter, the group health plan will typically begin to pay.
In a significant number of cases, however, the employee will seek legal representation and the comp claim will be subsequetly settled at some point. Mind you, this settlement occurs only after the group health plan has paid the medical expenses.
While the comp settlement is premised on no admission of liability, the claim will frequently be settled for an amount that represents considerably more than a nuisance claim. In evaluating the settlement, the parties will review the medical claims — which have been paid by the group health plan — and come to some agreement on terms. The settlement takes place, but the group health plan is left out. Remember, as far as the health plan knows, the comp claim is in denied status.
What are the risks to the comp carrier in these situations?
I gave a seminar on these issues last week to worker’s compensation defense attorneys. Here’s a short list of issues, by no means comprehensive.
#1 If the comp carrier has appointed counsel, what are the ethical duties of counsel to advise the self-funded health plan sponsor of the cost/benefit of the settlement where the comp coverage, for which premiums have been paid, is punting to the employer’s self funded health plan?
#2 If counsel for the worker’s comp claimant settles, having exchanged medical expense information showing payment by the health plan with the comp carrier, what are the duties of claimant’s counsel to advise the health plan of the settlement?
#3 What are the risks to the comp carrier if the health plan becomes aware of the settlement and asserts a claim against the at fault party? For example, if the comp claim is by a dependent of a spouse on the health plan, what is to stop the health plan from asserting a subrogation claim against the dependent’s employer?
#4 Does a release of claims by the employee foreclose a legal action by the plan in situation #3 if the parties are aware of a potential subrogation claim by the health plan?
#5 If a state bars subrogation claims by a health plan, does that bar a claim of equitable subrogation by the health plan against the comp carrier to recoup the medical expenses?
#6 What happens if a health plan asserts its exclusion of payment for occupational injuries and the comp carrier simultaneously denies that the accident was occupational? Who wins in this tug of war and in what venue will the legal resolution take place?
#7 Is there any reason a health plan may not simply claim refunds from health care providers for mistaken payments (asserting the exclusion for payments for occupational injuries) and leave the claimant with no compensation notwithstanding the settlement with the comp carrier?
These and similar issues make this an interesting and potentially volatile area of subrogation law. I have been involved in a number of cases involving claims by the health plan for reimbursement. The workers’ compensation bar is will aware of Medicare set aside requirements, but much less familiar with the risks posed by ERISA plans. This area will likely continue to be worthy of a close watch as the costshifting battles continue in assigning responsibility for health care expenses.