November 30, 2021

Volume XI, Number 334

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November 30, 2021

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November 29, 2021

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TPA Claims Processing Procedures: “Sometimes Just Ok Is Not Ok”

A recent case demonstrates the perils of missing a claim submission deadline under a self-insured medical plan. In a recent case, a North Carolina district court on May 1, 2020, denied a motion to dismiss on allegations that a third-party administrator (TPA) had failed to timely submit a claim to the stop-loss carrier despite instructions from the employer and the plan. Technibilt Group Insurance Plan v. Blue Cross and Blue Shield of North Carolina, 438 F. Supp. 3d 599 (W.D.N.C. 2020). In that case, Blue Cross and Blue Shield of North Carolina (BCBS) served as the claims administrator of the Technibilt Group Insurance Plan (the Plan).

In November 2018, a Plan participant that had been gravely ill passed away after accumulating claims in excess of $1.6 million during the 2018 plan year. Because the Plan sponsor, Technibilt, Ltd. (“Technibilt”), had stop loss insurance that only covered claims paid during the plan year, Technibilt notified BCBS of the impending end-of-year deadlines and the substantial monetary implications of failing to pay the claims by the end of the year.

While the date regarding when BCBS received notice was debated, ultimately BCBS paid half of the claims in early January 2019. That portion of the claim was not covered by Technibilt’s stop loss policy, leaving the Plan and Technibilt to make up the difference. BCBS alleged that it did not actually receive notice until December 31st, 2018, but plaintiffs allege they notified BCBS much earlier.

The Plan and Technibilt then sued BCBS, alleging, in part, that BCBS breached its fiduciary duty by failing to pay the claims within the time requested by Technibilt. BCBS made a motion to dismiss the claims, arguing, in part, that plaintiffs could not prove that BCBS was a fiduciary regarding the timing of payment of claims. Noting the early stage of the action, the court denied BCBS’s motion to dismiss and tentatively found that BCBS’s “control respecting disposition of the Plan’s assets, could plausibly make [BCBS] a functional fiduciary with respect to the handling of the extraordinary and urgent circumstances” under the issue at hand. Technibilt, at 605. As a result, even assuming the payment was made within BCBS’ standard timeframe, the court held that the facts and circumstances developed in discovery could show that “‘sometimes just ok is not ok.’” Id.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume XI, Number 11
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About this Author

Henry Talavera, Polsinelli PC, Retirement Plan Implementation Lawyer, Employee Benefits Attorney
Shareholder

Henry Talavera’s experience representing clients before the IRS and U.S. Department of Labor, along with his prior experience as a federal government attorney, enables him to handle complex issues for clients.

Henry has a broad-based, comprehensive practice that involves all areas of employee benefits law related to benefit programs and arrangements for employees, directors, and independent contractors. His extensive experience includes guidance relating to public, private, and tax-exempt employers on the design, implementation, and...

214.661.5538
Rafael Ramos Aguirre Employment Attorney Polsinelli Law Firm
Associate

As an associate in the Employee Benefits and Executive Compensation practice, Rafael focuses his practice on a variety of employee benefits matters. Rafael partners with Polsinelli attorneys on designing and implementing qualified plans, health and welfare plans and non-qualified compensation arrangements. Rafael provides counseling services that align legal strategies with clients’ business objectives.

Prior to joining the firm, Rafael served as Polsinelli summer associate and law clerk. His experience includes drafting individually designed plans, resolutions and amendments;...

816.572.4602
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