Participant's access to information in claims adjudications.

One of the purposes of ERISA was to provide participants with access to information so they could understand their rights and obtain their benefits from their plans.

One of the major problems that plaintiffs face is obtaining information and documents from insurance companies and third party administrators, when they do not comply with the US Department of Labor Claims regulations. For example, they do not provide the appropriate notices to the claimant about the specific sections they are relying upon in the plan documents or produce the documents relied upon in the claims adjudications.

These entities are not subject to penalties under ERISA unless they are designated as plan administrators, which rarely happens, and they can ignore their obligations to comply with ERISA.

I suggest that the statute and/or the claims regulations be amended to address these issues so that the insurance companies and TPAs will now have a financial incentive to comply with their obligations to the plans and the participants.

Comments

[Frank Cummings]

BOB --You really don‘t want first-stage claims handlers to be personally liable, do you? Those ERISA sec 503(1) first-stage people are not merely insurers or TPAs -- they could be in-house individual employees working in the employer’s own HR department. In any event, ERISA puts the onus on the plan (the employer?) to make sure that the first-stage denial (if it is a denial) sets forth “the specific reasons for such denial, written in a manner calculated to be understood by the participant.” If you have stonewalling, doesn’t the plan (the employer) lose the presumption of correctness? Isn’t that the ultimate “cost” to the stonewaller? And if you want somebody to sue, why not sue the real fiduciaries, who, after all, pick these service providers? I guess my real concern is that putting fiduciary liability on first-stage service-providers just runs up the cost of the plan, deters plan formation, and induces plan termination. Wouldn’t it be better to confine that to 502(2) claims review?
FRANK CUMMINGS