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The Phia Group, LLC – 1st Quarter Newsletter – 2015

The Book of Russo 

It’s finally baseball season and here in Boston that means the snow is finally gone (fingers crossed) and we can start seeing our dirty yards again.  The idea of 50 degree weather makes me want to jump into my shorts as soon as possible.  The long, harsh winter we had sure made it tough to get to work each day but as long as the industry is getting bigger and busier, we just find a way to get the work done.  Speaking of work, the first quarter has been full of it!  From subrogation issues to exclusion problems to state insurance commissioners messing around with stop loss carriers (hello New Mexico), the first three months of 2015 have been quite eventful.  We are excited about the rest of this year as we expand our service offerings and enhance those we already have in place.  I spend much time talking to leaders in our industry to ensure that we here at The Phia Group stay on top of the ever growing issues facing the country.  There’s so much more to do but we all should be proud of what we have accomplished thus far.  Happy reading! 

Letter from the Editor 

Spring has finally sprung, and with a record-breaking winter of over 100 inches of snow in Boston, it couldn’t come a moment too soon.  It was unquestionably a cold few months, but make no mistake about it, we are always turning up the heat.  A lot happened this past quarter and we are excited to bring you the latest news and notes about how The Phia Group is focusing on being trailblazers for innovation in the Self-funded industry.  This installment of the newsletter is packed with announcements of new offerings, the latest from the Supreme Court of the United States relating to ERISA preemption, and of course, registration information for our April webinar.  This is a newsletter you aren’t going to want to miss. Stay tuned for some changes coming in the editorial lineup of The Phia Group Newsletter.  Thank you for continuing to Learn With Us, Plan With Us, and Save With Us!!!

Stop the Presses

The Phia Group Announces the Release of a Preventive Care Template available in the Phia Document Management® Software 

As the cost of healthcare rises, employers are looking for inexpensive ways to keep their employees covered and satisfy new federal requirements. Preventive Care Only plans are the perfect solution. With today’s ever changing rules and regulations, Preventive Care Only plan documents provide employees with basic affordable coverage. Offered in conjunction with other offerings, a Preventative Care Only plan can result in huge savings for the employer, while offering complete coverage to employees and avoiding any ACA tax penalties!

The growing demand for Preventive Care plans is providing a substantial influx of opportunities in the self-funded world, and Phia Document Management® has streamlined the process of setting up these innovative plan strictures while still following federal compliance regulations. Creating compliant, efficient and consistent Preventive Care plan documents has never been easier than with Phia Document Management®! Preventive Care materials are available now.

For more information regarding Preventive Care templates, Phia Document Management®, and The Phia Group’s other innovative offerings, please contact Toussaint Anderson III, PDM Project Manager, by email at tanderson@phiagroup.comor by phone at 781-535-5662.


Free Monthly Webinar

Register Now – Spots Are Limited! 

“Survival of the Fittest” – Best Practices to Perfect a Modern TPA 

Thursday, April 23, 2015

1:00 PM EST to 2:00 PM EST 

Join The Phia Group on April 23, from 1 to 2 PM EST, as they discuss best practices and new methodologies TPAs are considering, in their quest to remain relevant in a modern healthcare arena.  Covered topics will include innovative services, products, and processes being used today, and developed for tomorrow.  The Phia Group will identify both the issues and solutions that seem to be spreading, and how proactive administrators are addressing both.

Join The Phia Group’s legal team as they discuss the best practices for TPA’s and how this can help you!

ATTENTION:  If you do not receive a confirmation email shortly after registration with webinar log-in details, check your spam filter for emails from

Reporting Portal Unleashed:  The Phia Group Responds to Clients’ Needs

With 2015 in full swing, we wanted take a moment to tell you about some exciting news! At the start of the year we went live with our new and highly anticipated Online Reporting Portal!  It was designed so that our clients could access their reports anytime!  All reports can be generated within the portal and exported into excel format and manipulated.  This is a feature our clients asked for, and as is our custom, The Phia Group delivered!

New Reports:

Aging Report

This report provides a look at the average duration from case activation to resolution, by Case Type. Viewable results include total cases, total recovery cases, and average days(duration). In addition, the report displays comparisons to the aging, of case types, across all of Phia’s clients allowing you to compare results globally.

Historical Overview Report

This report will serve as a running overview of recovered cases and their corresponding values/recovery amounts per quarter and year. For overviews “to-the-day”” and statistics prior to 2008, requests should still be made through the appropriate Client Account Manager.

Report Enhancements:

Email the Claim Recovery Specialist (CRS) – You will now have the ability to directly email the Claim Recovery Specialist handling the case you’re inquiring about. Please click on the name of the “CRS” located at the end of case in the column titled “Current CRS (click to email)” where you will be able to email them directly (see below screen shot).

As always, we truly value our client’s feedback and used it to create a user-friendly portal.  If you have any thoughts or suggests about the portal, we are always looking to improve our products – and the most valuable information we have is all of you!

If u have any questions about the reporting portal, please contact Jennifer Marsh at 781-535-5634.


Fighting For Your Right …. The Phia Group Takes It to Wisconsin Auto Insurer

Note from the Editor:  Over the past several weeks, a few members of The Phia Group’s legal team, spearheaded primarily by Pamala Parette with the direction of Christopher M. Aguiar, Esq., battled the legal department of a well-known auto insurer in the state of Wisconsin and won! Basically, the auto insurer was refusing to issue payment from the medical payment coverage policies of plan participants relying on the position that the law not only didn’t require them to reimburse our clients, but in fact, it was our clients who owed them money!?

About 2 months ago, select members of the legal team conferred, analyzed applicable case law, and devised a plot to fight back.  Simply, they picked one case that was worth a fight and effort, but more importantly, didn’t put our clients at risk of owing money to the auto insurer, and subrogated against the insurer.  We are happy to report that as a result of these efforts, The Phia Group was able to obtain a 100% reimbursement of claims paid by the Plan on this case from the auto insurer’s medical payment coverage, as well as an admission that the auto insurer’s policy was flawed and would be remedied.

Pamala’s experience in the auto insurance arena was pivotal in this effort.  What many of our clients may not know is before Pamala made her transition to the world of TPAs & self-funded plans, she spent several years as a claim adjuster for several auto insurance companies.  Her experience there provided her with intimate knowledge of appropriate policies and procedures in claims handling.  Pairing that experience with the prospect of our filing a complaint with the Wisconsin Department of Insurance provided to be a formidable strategy that will lead to more savings for our clients! A great team effort worth mention!!!


SCOTUS to Weigh in on OP Recovery as an Equitable Remedy 

Can You Identify A Fund? … By: Catherine Dowie

This past week, the Supreme Court granted certiorari in yet another ERISA subrogation case.  This time it was an appeal from an 11th Circuit decision, and the question presented to the court was:

Whether, under the Employee Retirement and Income Security Act of 1974 (ERISA), a lawsuit by an ERISA fiduciary against a participant to recover an alleged overpayment by the plan seeks “equitable relief” within the meaning of ERISA Section 502(a)(3), 29 U.S.C. § 1132(a)(3), if the fiduciary has not identified a particular fund that is in the participant’s possession and control at the time the fiduciary asserts its claim.

There is currently a 6-2 circuit split (in favor of plans overpayment recovery), but the Solicitor General has sided with the 2 opposing circuits in a previous case.

The plan participant is claiming that the Plan did not assert its lien until after settlement, and while the funds were held in trust for several months while his attorney attempted to negotiate with the Plan, an impasse resulted in the attorney requesting that the Plan either accept the final offer or file suit; if he did not receive a response in 14 days, he would release the funds.  The Plan failed to respond and by the time suit was filed, the plan participant was no longer in possession of the full amount of the Plan’s interest.  The full settlement was $500,000.00 and the Plan’s interest was $121,044.02, attorney’s fees and costs were $263,788.48.

Arguments haven’t been scheduled yet …. Stay tuned!!!


Check This Out!!! 

Pricing Healthcare is becoming a national hub for direct-pay healthcare.  The company helps quality healthcare facilities across the U.S. put together and publicize affordable, direct-pay pricing for their procedures.  They then work with self-funded employers to realize savings by steering their employees to these facilities.  Prices are typically 35% to 65% below average insured rates, and are available to anyone paying cash upfront (or 30 days same as cash for employers and other benefit groups).  Price lists are free for anyone to access, and almost all posted rates include the facility, physician, and anesthesiologist fees bundled into a single global price.  Facilities currently listed on include hospitals, surgery centers, and imaging centers.  The company is rapidly expanding its list of participating facilities by partnering with facility management companies, third party administrators, and employers in all 50 states.

On the Road Again … 2015 Upcoming Presentations in the 1st Quarter


4/8: IOA Re Management Meeting – Blue Bell, PA
4/13: NFP Conference – Washington, DC
4/15: BevCap Best Practice Workshop – Orlando, FL
4/28: Berkley Captive Symposium – Cayman Islands
5/5: RCI Forum – Scottsbluff, NE
5/13: Optum Clinical/Claims Roundtable – Mohegan Sun, CT
6/7- Leavitt Trustee Conference – Big Sky Montana
6/15 – SOA Meeting – Atlanta, GA

From the Blogosphere





The Stacks


To Be, Or Not To Be … A Fiduciary

        by Andrew Silverio, Esq.

The Employee Retirement Income Security Act (“ERISA”) provides the federal regulatory framework for private sector employee benefit plans.  As one of the primary goals of ERISA is to establish a uniform statutory framework for employee benefit plans, a major feature is the preemption of most state regulation which touches on employee benefit plans falling within its scope.  It is because of this that a self funded employee benefit plan under ERISA is essentially immune to most forms of state regulation, and must look primarily to ERISA (and of course, the Affordable Care Act in the case of health and welfare plans) for regulatory guidance.

Plan fiduciaries are those exercising discretionary authority over plan assets, plan management, or both.  ERISA holds these plan fiduciaries to a high standard; such fiduciaries have significant duties toward their respective benefit plans and their participants, and must carry out these duties prudently, faithfully adhere to the applicable plan document, and act in the best interests of the plan and its participants.  A significant aspect of this fiduciary status, and the reason it is so important to know whether one is acting as a fiduciary, is the personal liability imposed on fiduciaries for breaches of their duties.  In the context of a health plan, a breach of fiduciary duty can result in enormous damage to the plan, damages which can then be claimed from the responsible fiduciary’s personal assets.

Most agreements in the industry contain numerous disclaimers and indemnifications, purporting to evade any fiduciary liability and adamantly denying fiduciary status. However, many plans, TPAs and vendors focus far too much on contractual disclaimers and indemnifications, and too little on the nature of their actual activities. While it is required that an ERISA plan have at least one “named” fiduciary pursuant to its plan document, this is by no means the only way to attain fiduciary status.  “An entity’s status as a fiduciary hinges not solely on whether it is named as such in a benefit plan, but also on whether it ‘exercises discretionary control over the plan’s management, administration, or assets.’” Hartsfield, Titus & Donnelly v. Loomis Co., 2010 WL 596466, 2 (Dist. N.J. 2010), citing Mertens v. Hewitt Assocs., 508 U.S. 248, 252 (1993).

In addition to precluding any attempt to disclaim fiduciary status, ERISA also does not allow one to disclaim fiduciary liability.  See 29 U.S. Code § 1110(a), “Any provision in an agreement or instrument which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty under this part shall be void as against public policy.” Although this liability cannot be “extinguished”, it can be allocated, by one who understands the nature of the fiduciary status and its corresponding duties and liabilities. Pursuant to 29 U.S. Code § 1105(c), the “instrument under which a plan is maintained” may expressly provide for an allocation of fiduciary responsibilities (other than those of a trustee) among named fiduciaries.  Additionally, the instrument may allow such named fiduciaries to designate persons or entities other than named fiduciaries to carry out fiduciary responsibilities. More importantly, if a fiduciary allocates such a responsibility to another person, “…then such named fiduciary shall not be liable for an act or omission of such person in carrying out such responsibility…” 29 U.S. Code § 1105(c)(2).  In other words, once a named fiduciary properly delegates away a fiduciary duty, they are released from liability to the extent of the scope of the duty delegated.

They are not released from all liability, however.  The original fiduciary still has fiduciary duties in prudently selecting a party to appoint as a fiduciary, as well as following the proper plan procedure for doing so, and reasonably monitoring the actions of the appointed fiduciary.  Once a fiduciary duty is properly allocated, the original fiduciary can be held liable for a breach of that duty only through ERISA’s rules on liability between co-fiduciaries (or through his own breach in imprudently selecting or failing to monitor the designated fiduciary). Under these rules, one is liable for the actions of a co-fiduciary only if he knowingly participates in or conceals the co-fiduciary’s breach, enables the co-fiduciary’s breach through his own breach of fiduciary duties of prudence and diligence, or has knowledge of the co-fiduciary’s breach and makes no effort to cure the breach. 29 U.S. Code § 1105(a).

Once an examination of an entity’s activities in relation to the plan is complete, the next question is of course what to do about this liability.  An option is to identify activities which subject your company to fiduciary liability and manage this liability by delegating them out to another party as discussed above, making sure to follow proper plan procedure in doing so.  Another option is to acknowledge this responsibility and ensure adequate protections are in place, via various forms of insurance policies. It is important to note that the “fidelity bond” required by ERISA will not protect a fiduciary from personal liability.  This bond, required for any person who handles plan funds, is in place to protect the plan in the event of dishonest conduct which damages the plan.  It will not help the responsible party in the event of a breach.

No matter which course of action is undertaken, a thorough understanding of one’s responsibilities and liabilities in any given situation gives crucial insight into the true value of the services being provided.  There is a good reason agreements which openly assume fiduciary status and liability come with higher fees than those which disclaim such status.  If the activities to be performed under an agreement will subject one to fiduciary liability regardless of contract language, why not assume that liability in the agreement?  If assuming additional liability in the agreement, this risk and its potential costs should be taken into account in calculating the TPA’s fee.  Additionally, an entity armed with this knowledge is better equipped to assess the extent of the liability it truly wishes to take on.


Never More Important …

By:  Ron E. Peck, Esq.

Sr. VP & General Counsel

The Phia Group, LLC


As employers begin to seriously consider self-funding for providing health benefits to their employees, figuring out how to contain costs is a balancing act we must all master.

Before the Patient Protection and Affordable Care Act (PPACA) was implemented, carriers and employers knew there would be costs involved.  In the wake of these new expenses, many employers’ knee jerk reaction was to analyze the “Pay or Play” mandate, and realize that the penalties for not offering coverage was less than the cost they’d incur maintaining their policies.  Many savvy employers and brokers, however, learned about the benefits of self-funding.  No wonder that we saw growth in self-funding in Massachusetts following the passage of “RomneyCare,” and similar self-funded growth nationwide following the passage of “ObamaCare.”

As employers with healthy, low risk lives, chose to self-fund; so too did employers with high risk lives take advantage of the health insurance exchanges.  Paying a relatively small penalty to send costly employees to the exchange is an enticing option.  As this influx of costly lives flooded the exchanges, the hope had been that healthy lives would join them, balancing the risk.  Sadly for supporters of PPACA, the healthy lives remained (or became) self-funded.  Seeing this disaster as a risk to PPACA, many have joined forces with state insurance commissioners and the NAIC to make self-funding less attractive for otherwise healthy employee groups.  Due to the federal preemption created by the Employee Retirement Income Security Act of 1974 (“ERISA”), they have been unable to attack self-funded plans directly.  Instead, they have restricted the ability of stop-loss insurance carriers to offer protection to self-funded plans.  Without being able to secure stop-loss with a reasonable deductible, many employers who were interested in self-funding cannot accept the kind of increased risk they are now being asked to bear.  Only if the costs can be contained, can the risks inherent in a “higher deductible” stop-loss policy be deemed acceptable.

Some believed that by giving “everyone” insurance, the amount charged for medical care would decrease.  Once the number of patients with deep pockets increased, however, so too did prices.  Changing “who” pays had no effect upon “how much” is paid.

Six years following the passage of RomneyCare in Massachusetts, a so-called “cost control” or “Health Reform 2.0” law was passed; (the legal name is Chapter 224 of the Acts of 2012).  The bill sets annual spending targets, encourages the formation of accountable care organizations, and establishes a commission to oversee provider performance.

We can hope that we see such change at a federal level, but in the meantime, it falls upon us to identify ways to contain costs, and keep self-funding viable.  Health plans must renew their focus on such “classic” cost containment measures as:

– Subrogation & Recoupment of Funds from Liable Third Parties

– Overpayment Identification and Recovery

– Eligibility Audits & Fraud Detection


In addition, now is the time to consider “new” cost containment methods, such as:

– Revisiting How Out of Network Claims are Priced

– Revisiting How The Plan’s Network is Structured, and Negotiating Better Deals in Exchange for Steerage

– Carving Out High Cost Procedures, and Negotiating for Their Payment on a Case-by-Case Basis

– Focusing on Preventative Care, Wellness, and Other Low Cost / High Reward Benefits

By focusing on cost-containment, employers can take steps to reduce the risk they face, making the attack against stop-loss and self-funding less impactful upon our ability to self-fund.


UPDATE:  SCOTUS Denies CERT in the 2nd Circuit … Now What?

            By Christopher M. Aguiar, Esq.

A few months ago, the 2nd Circuit took it upon itself in the case of Wurtz v. Rawlings to throw a bit of a wrench in the ability of a benefit plan to remove a law suit brought to enforce anti-subrogation laws to federal court.  Industry pundits advocated for the Supreme Court of the United States to once again step in and resolve a pre-emption dispute relating to subrogation for an almost unprecedented 4th time in 15 years.

Unfortunately, this time it was not to be.  Just last week the Supreme Court denied an application to hear the case and now leaves a bit of a dispute in the law; essentially, the standard for removal to federal court is different in the 2nd Circuit than in almost any other federal jurisdiction in the country.  Self funded benefit plans can take solace in the fact that it seems the 2nd Circuit case does not apply to them, but plaintiff lawyers in the pertinent states are doing a great job at ignoring the part of the case that excepts those plans from this rule, so those handling subrogation claims in the 2nd Circuit must be prepared for a bit of a war to ensure their ability to preempt state law anti-subrogation laws continues unfettered.


Phia Group Case Study


Claim Negotiation & Sign-off

The Phia Group received a large claim from a hospital in the southeast. The claim in at $155,000, and included two surgical implants; after a preliminary discussion with the hospital’s billing office, The Phia Group’s request for settlement was escalated to the hospital’s management. By referencing the hospital’s cost and reimbursement data, The Phia Group was able to show the hospital’s management that the charges were simply not reasonable, and that the charges were not payable under the Plan Document. In turn, however, the hospital challenged the relevance of Phia’s review by suggesting that there was a PPO network in play, so the “reasonableness” of their charges was irrelevant. The Phia Group’s legal department reviewed the matter, and was able to identify a chink in the PPO contract’s armor – and The Phia Group was able to successfully argue that the PPO contract did permit the payer to reduce the payable amount based on what is reasonable under the Plan Document. Additionally, The Phia Group leveraged its data to discuss the hospital’s actual costs of procuring the implants, which the hospital did not counter. The Phia Group’s legal team sent the hospital’s management a memorandum describing its position, as well as a settlement proposal – and the hospital’s management signed the agreement without further argument. The network discount would have required a net payment of $109,000 – but The Phia Group secured a settlement for $52,000, resulting in $57,000 in additional savings for the payer.

Network Rate: $109,000
Paid: $52,000
Additional Savings: $57,000