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The Stacks - 4th Quarter 2017

Aid-in-dying laws and the Implications for Self-Funded Plans
By: Maribel E. McLaughlin, Esq.

Two years ago, a woman close to my mother was diagnosed with an aggressive form of brain cancer. Along with her two daughters, she went through the various treatment options presented to her and determined that she was going to try all of them.  She wanted to put her best foot forward for her daughters and her granddaughter, and she found the strength to fight the cancer with every cell in her body.  After sixteen months of treatment, losing her hair, the inability to eat properly, and her body being riddled with the toxins that were used to fight the cancer, she decided that she wanted to end her life; her way, on her own terms.  She had a lengthy discussion with her daughters about her choice, and as sad as they were that they would soon be losing their mother, they understood that their mother wanted to live every moment to its fullest, but, when she was ready, she would make the decision to die on her own terms.  One particularly difficult night, she pushed herself to take one last walk through the Newport Cliff Walk with her daughters and granddaughter, enjoyed her last Del’s lemonade, savored the final clam chowder she was going to have, and decided that this was her chance to end her life on a high note.  That night, she took a higher dose of the medicine that she had been taking for the last sixteen months, and never woke up.  She purposely overdosed; or, as many would call it, she committed suicide.

D.C.’s New Death with Dignity Act
The Death with Dignity Act went into effect on February 18, 2017 in Washington D.C., and last month, doctors were able to begin the process of prescribing life-ending drugs to terminally ill patients; adding the District to six states that currently authorize that practice.  

The D.C. Health Department launched a website where physicians can register to participate in the “Death with Dignity” program, where doctors, pharmacists, and patients can learn about the law’s requirements and patients and doctors can download required forms.  Patients must be older than eighteen with a prognosis of less than six months to live in order to be eligible. In addition, they must have made two requests at least fifteen days apart for life-ending medications. They must ingest the drugs themselves, and two witnesses must attest that the patient is making the decision voluntarily.

Affordable Cara Act & Physician-Assisted Suicide
According to Section 1553 of the Affordable Care Act (“ACA”) , a health plan may not discriminate against an individual or institutional healthcare entity because the entity does not provide any healthcare item or service that causes, or assists in causing, the death of any individual, such as by assisted suicide, euthanasia, or mercy killing.  Put another way, if terminally ill patient requests that his doctor help him end his life, and the doctor refuses for moral or other reasons, that doctor is protected against discrimination by federal law.  This protects the doctor that may be targeted by insurance company because of their refusal to help patients end their lives.

California’s Election of Death of Dignity Law
In California, one of the six states, the law does not make it easy for a patient to elect death with dignity; the patient must be terminally ill to request a doctor’s prescription for medications intended to end their lives peacefully.  The End of Life Option Act creates a long list of administrative obstacles that both patients and doctors must overcome. At the time of the law’s enactment, it became the fifth state to implement an aid-in-dying law, and it is currently also the most stringent.  Patients must get a prescription from a participating physician.  This is not as easy as it may seem A coordinator may connect the patient with a physician that participates; but, if the patient is a U.S. military veteran that receives healthcare from the U.S. Department of Veterans Affairs, that patient will not be able to utilize this state law since federal law prohibits the use of federal funds for this purpose.  Additionally, the forty-eight Catholic and Catholic-affiliated hospitals located in California will not provide patients with the option to end their lives.   

Cost of Death vs. Cost of Healthcare
Another obstacle that patients may come across is the cost of the drugs involved with the assisted suicide practice.  The patient’s health plan may not cover them - and the states that have allowed the practice of assisted suicide do not require health insurers to cover the medications.  Under The Employee Retirement Income Security Act of 1974 (ERISA), there are minimum standards for voluntarily established health plans in private industry to provide protection for individuals in these plans; plans must provide participants with information about plan features and funding, and furnish information regularly and free of charge.  Nothing about the Acts requires that a self-funded plan under ERISA, cover the cost of the death-with-dignity practice. Luckily under ERISA, a Plan still has the liberty to create their health benefits. A health plan, when drafting their Plan Document, can choose to either allow this practice, or not. The ACA prohibits the discrimination of a provider that does not provide assisted suicide services.  The Act does not require health plans to allow the practice. The option is left to the Plan.

Healthcare costs in the United States have risen astronomically over the past decade and many people fear that insurance companies may look to assisted suicide as a way for a health plan to save money of expensive medical care.  One report concluded that it would save approximately $627 million dollars in 1995.   Some, who oppose assisted suicide, argue that insurance companies may begin to limit expensive procedures for patients who are suffering from terminal illnesses such as cancer, AIDS, and multiple sclerosis.  Others argue that even though the aggregate savings is small, the impact on an individual company or an individual family would be a powerful enough financial incentive to encourage the practice even where it was not intended.   Many fear that patients would be more likely to consider physician-assisted suicide as a better alternative with the added bonus of saving their family money and the burden of prolonged, expensive care. Insurance companies may try to exclude life-saving or life-extending drugs and pressure people into thinking about the practice of physician assisted suicide.

Collins and the Suicide Exclusion
Health plans are permitted to include a suicide exclusion that would enable the plan administrator to deny claims associated with the suicide. In Collins v. Unum Life Insurance Co., 185 F. Supp.3d 860 (2016),  the Supreme Court held that “Unum reasonably interpreted the suicide exclusion to encompass insane suicide, [and that] Mr. Collins' sanity at death has no bearing on the outcome.”  The issue in this case involved a state law which stated that a suicide exclusion would be only be valid if liability was limited to an insured “who, whether sane or insane, dies by his own act.”  Former Navy SEAL David M. Collins served this country for seventeen years, during which he was deployed to Iraq, Afghanistan, and Kuwait. He served in dangerous and stressful situations, many of which exposed him to enemy gunfire and blasts from mortar fire.   Despite seeking treatment, Mr. Collins was found dead in the driver's seat of his car with a gunshot wound to his head on March 12, 2014. The death was ruled a suicide.  Prior to his death, Mr. Collins had been working for Blackbird Technologies, where he participated in an employee benefit plan that provided basic and supplemental life insurance through group policies funded and administered by Unum Life Insurance Company of America.  When Mr. Collins died, his widow, Jennifer Mullen Collins, applied for benefits under both policies. Unum granted benefits under the basic policy, but denied benefits under the supplemental policy's suicide exclusion.  In addition, the Court held that it found “substantial evidence in the administrative record to support Unum's conclusion that the suicide exclusion applied.”

Option to Elect or Exclude Suicide
Plan administrators can take the position of either excluding assisted-suicide claims or paying them.  They can allow the practice, and give the power to the patient to make the decision for themselves, and ultimately save the Plan money for care that the patient would have ultimately not wanted; or, they can exclude the practice and have the peace of mind that everything that should have been covered was covered.  Whether you’re a broker, a health plan sponsor, third-party administrator, or reinsurer, this is something that should not only spike an interest, but also it should worry you if you have health plans in the states that allow physician assisted suicide practices.  Specialists in plan document drafting can provide assistance in reviewing your plan document and ensuring that the plan document addresses this issue specifically.
1 HHS Office of the Secretary & Office for Civil Rights (OCR), Section 1553 - Refusal to provide assisted suicide services (2015), (last visited Aug 9, 2017).
2 42 U.S. Code § 18113 (2010)
3 AB-15 End of life.(2015-2016), Bill Text - ABX2-15 End of life. (2015), (last visited Aug 9, 2017).
4 Id.
5 Emily Bazar, Aid-In-Dying: Not So Easy Kaiser Health News (2017), (last visited Aug 9, 2017).
6 29 U.S.C. 18 § 1001
7 Physician Assisted Suicide and Health Care Costs, Low Fat Diet Plan, (last visited Aug 9, 2017).
8 Id
9 Id.
10 Collins v. Unum Life Insurance Co., 185 F. Supp.3d 860 (2016)
11 Id. at 882
12 Id. at 871
13 Id. at 863
14 Id. at 864
15 Id. at 863
16 Id. at 865
17 Id. at 880
State-mandated Continuation of Coverage and ERISA Preemption: What Self-funded Employers Need to Know
By: Brady Bizarro, Esq.

According to one prominent health law attorney, “Although in its text ‘hospital’ appears only once and ‘physician’ not all, ERISA may be the most important law [prior to the Affordable Care Act] affecting health care in the United States.” William Sage, “Health Law 2000”: The Legal System and the Changing Health Care Market, 15(3) Health Aff. 9 (Aug. 1996). Understanding the intricacies of the Employee Retirement Income Security Act of 1973 (“ERISA”) and its preemption clause can be a challenge for even the most assiduous attorney. The statute supersedes any and all state laws insofar as they “relate to” any employee benefit plan. It also contains a “savings clause” which preserves the state’s traditional role of regulating insurance. That clause is then qualified by the “deemer clause,” which acts as a kind of escape hatch through the savings clause. For employers, that escape hatch is key because it allows them to avoid state insurance regulations by self-funding their health plans rather than by purchasing health insurance. Increasingly, however, states are testing the limits of preemption by passing leave laws which mandate that employers continue health insurance coverage for eligible employees out on leave.

Perhaps the best known leave law is the federal Family and Medical Leave Act of 1993 (“FMLA”). The statute, like most other federal laws, applies regardless of the source of insurance. It requires employers to provide twelve weeks of unpaid, job-protected leave for an employee’s own serious health condition, for the birth or adoption of a child, or to care for a spouse, parent, or child with an illness. Significantly, the law also requires employers to maintain group health benefits for employees who take FMLA leave. Even though this continuation of coverage requirement clearly impacts self-funded ERISA plans, federal laws such as the FMLA are outside the scope of ERISA preemption.

At the state level, five states have now passed laws to address a perceived gap in the FMLA, granting eligible employees paid family leave: California, New Jersey, Rhode Island, Washington, and New York. Rhode Island law requires four weeks of paid leave, California and New Jersey each offer six weeks of paid leave, and Washington offers up to twelve weeks per year. New York’s Paid Family Leave Act (“PFL”), scheduled to take effect on January 1, 2018, offers one of the longest and most comprehensive paid family leave laws in the country. What makes the PFL unique is not just that it requires employers to provide twelve weeks of paid family leave; it also requires employers to continue health insurance coverage to employees out on leave. While this state-mandated employer obligation would seem to fall squarely under the purview of ERISA preemption, it turns out that determining the scope of ERISA preemption is an arduous task.

The key question to answer is whether the state law at issue “relates to” an ERISA plan.  The U.S. Supreme Court has said that a state law “relates to” an employee benefit plan covered by ERISA if it refers to or has a connection with that plan, even if the law is not designed to affect the plan or the effect is only indirect. See, e.g., Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990). This implies that there is no relevant distinction between obligations imposed on the employer versus on the employee benefit plan for purposes of determining whether ERISA preemption applies. Simply put, state laws which impose obligations on employers, and not specifically plans, may still be preempted. In addition, the Court has held that ERISA does not preempt state laws which have only a tenuous, remote, or peripheral connection with an ERISA plan, as is typically the case with laws of general applicability.

The Court directly addressed ERISA preemption and a state law which mandated the extension of health insurance coverage in District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125 (1992). In Greater Washington, the Court reviewed a Washington, D.C. law which required employers who provided health insurance for their employees to provide equivalent health insurance coverage for employees eligible for workers’ compensation benefits. The Court explained that when a state law specifically refers to benefit plans regulated by ERISA, that provides a sufficient basis for preemption. It made no difference to the Court that the law also related to ERISA-exempt worker-compensation plans or non-ERISA plans. Once it is determined that a state law relates to ERISA plans, this is sufficient irrespective of whether the law also relates to ERISA-exempt plans.
In earlier cases, petitioners argued that ERISA preemption should be construed to require a two-step analysis: if the state law “related to” an ERISA-covered plan, they argued, it may still survive preemption if employers could comply with the law through separately administered plans exempt from ERISA (making the distinction between a plan requirement and an employer requirement). See generally Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985). In Greater Washington, the U.S. Supreme Court dismissed that analysis, stating, “We cannot engraft a two-step analysis onto a one-step statute.” See Greater Washington, at 133. Despite the Court’s rulings, the breadth of the “relate to” clause remained unclear and the question of state-mandated continuation of coverage was not directly addressed.

In 2005, the Department of Labor (“DOL”) seemed to put this issue to rest in an advisory opinion on the applicability of leave substitution provisions of the Washington State Family Care Act (“FCA”) to employee benefit plans. The FCA permits employees entitled to sick leave or other paid time off to use that paid time off to care for certain relatives of the employee who had health conditions or medical emergencies. As part of its analysis, the DOL analyzed section 401(b) of the FMLA, which provides that state family leave laws at least as generous as the FMLA are not preempted by “this Act or any amendment made by this Act.” 29 U.S.C. § 2651(b). Further, the DOL cited to a 1993 Senate report which recounts a colloquy between Senators Chris Dodd (D-CT) and Russ Feingold (D-WI). The discussion involved the leave substitution provisions of the Wisconsin FMLA and ERISA preemption. The record revealed that Senator Dodd, the chief sponsor of the FMLA, remarked, “The authors of this legislation intend to prevent ERISA and any other [f]ederal law from undercutting the family and medical leave laws of States that currently allow the provision of substitution of accrued paid leave for unpaid family leave…” The DOL relied on this exchange as additional support for the notion that state family leave laws at least as generous as the FMLA (including leave laws that provide continuation of health insurance or other benefits) are not preempted by ERISA or any other federal law.

As a result of the department’s guidance, it appeared as if state family leave laws enjoyed special protections from ERISA preemption. In 2014, the Sixth Circuit Court of Appeals considered the same issue and reached the opposite conclusion. In Sherfel v. Newson, 768 F.3d 561 (2014), the Court found that the leave substitution provisions of Wisconsin’s FMLA sufficiently “related to” an ERISA plan such that they were preempted by ERISA. Specifically, the Court held that the state law would “mandate the payment of benefits contrary to the [written] terms of an ERISA plan,” thus undermining one of ERISA’s chief purposes; achieving a uniform administrative scheme for employers. Newson, at 564. As part of its analysis of the preemption issue, the Court also dismissed the legislative history relied upon by the DOL in an uncommonly blunt (and borderline satirical) manner. Considering whether legislators intended to preclude the preemption of state family leave laws by ERISA, the Court observed, “[T]he idea that this colloquy ever passed the lips of any Senator is an obvious fiction. Colloquies of this sort get inserted into the Congressional Record all the time, usually at the request of a lobbyist…” Newson, at 570.

By ruling that a state family leave law was preempted by ERISA, the Sixth Circuit Court of Appeals aligned itself with the U.S. Supreme Court’s earlier jurisprudence on preemption. It remains to be seen how other Circuit Courts will address similar challenges to state leave laws; especially those that mandate continuation of coverage. The conservative approach for employers would be to continue health coverage when required by state law; however, the Sixth Circuit is the highest court to address this issue to date, and self-funded employers would be on solid footing to use ERISA preemption as a shield against state-mandated continuation of coverage.

Paid family leave is one of the few policies in Washington, D.C. that has bipartisan support, and employers should expect to see more states pass laws akin to New York’s Paid Family Leave Act. The President explicitly referred to paid family leave in a speech to a joint session of Congress on February 28, and his 2018 budget proposes six weeks of federal paid parental leave. While it remains unclear if that policy will become law, the trend is likely to continue at the state level, and as those laws impact self-funded health plans, the issue of continuation of coverage and ERISA preemption will increasingly attract the scrutiny of the courts.

Brady Bizarro, Esq. is an attorney with The Phia Group, LLC.
Taking Health Care International – The Growing Trends of Importing Care and Exporting Patients
By: Andrew Silverio, Esq.

Esteemed physicist Richard Feynman is remembered by many for the phrase “If you think you understand quantum mechanics, you don’t understand quantum mechanics.”  This sentiment rings true for the continually evolving landscape of our healthcare system as well, and the problems facing all of us, particularly as insurers, employers, and patients.  For those of us within the healthcare or health risk industries, the more we learn about the problems we face and what is causing them, the more we realize just how complex the landscape is and what an impossible task it would be for any single solution to reel in the cost of care.

In tow with the cost of care, health premiums as well as per capita healthcare spending in America steadily increase every year.  This should not be news to anyone, and countless strategies have been proposed to slow and eventually reverse this inflation.  But, for many, the immediate objective isn’t to “fix” healthcare or undo the decades of developments which brought us here.  For many, the immediate goal is just to get care for their employees and families in an affordable way.  Although this problem is not uniquely American, we spend more of our GDP on healthcare than any other country (by a wide margin), and care is more expensive here than anywhere else.  As such, several newer strategies for cost containment are reaching beyond our borders into the international market – and doing so with impressive results.

One strategy aims to avoid the exceedingly high prices of some prescription medications in America by simply getting them from elsewhere.  Countries designated as “Tier 1” countries (including Canada, the UK, Australia, and New Zealand) have safety and efficacy standards which equal or exceed American standards, and enjoy significantly lower prices for drugs which are often chemically identical.  So, why hasn’t the American prescription drug market self-corrected due to this international competition?  The simple answer, and the reason many employers are hesitant to take advantage of this option, is that the practice is illegal.  Under federal law, drugs which are manufactured for sale outside the country are not FDA approved, as there is no potential for oversight in the manufacturing process.  Additionally, even if the foreign version of the drug is chemically identical in every respect, FDA guidelines address more than just the chemical makeup of the drug – they relate to labeling, storage, and transportation as well.  So, even a drug manufactured within the United States for sale outside of the country would be considered illegal if it was later re-imported into the country.

So, if importing foreign drugs is illegal, how is it a viable option for cost containment?  It’s possible, under the right circumstances, due to a well documented FDA policy of “enforcement discretion”.  Under this policy, the FDA does not prosecute individuals who import a limited quantity of prescription medications from abroad for personal use.  This discretion is based on several factors, including that the drug is for personal use only and that the amount imported is no more than a 3 month supply. So, if a program is set up correctly, the savings on many costly medications can be huge, with very minimal risk to the employer.  Two important things to consider, though, are safety and plan document design.  Regarding safety, it’s important to remember that just because a drug comes from a “Tier 1” country does not mean it is safe.  Just as you (probably) wouldn’t buy prescription drugs from someone out of a suitcase on the street, it’s important to ensure that you are working with reputable people and pharmacies abroad when dealing with this type of program.  There have been incidents involving drugs which were imported from Tier 1 countries after being manufactured in other countries with more lax standards, as well as incidents were drugs were found to be outright counterfeits.  Regarding plan document design, any given plan document likely has some existing barriers to making a seamless transition into reimbursing for expenses such as these.  Any exclusions or language which would conflict must be removed, and these changes should be approved by the plan’s stop-loss carrier and TPA (and ideally the PBM as well).  But again, when set up and run properly, this type of program can generate significant savings with minimal risk to the employer or patient.

Another trend picking up steam is specialized medical tourism.  Medical tourism is certainly nothing new, both within the country and internationally, but we are seeing a new trend – providers gearing their business model to specifically target medical tourism, and sometimes even specific conditions/illnesses.  When a facility specializing in a certain surgical procedure or implant, or treating a disease with particularly costly treatment, sets up shop just over the boarder or just offshore, it’s surely no coincidence.

A prime example of this is Health City Cayman Islands. Health City is a brand new facility (they took their first patient in 2014) that offers a broad spectrum of healthcare services, but none illustrate the savings potential better than their hepatitis C program.  Of course, a medical tourism offering only helps an employer save money if patients want to utilize it.  Health City seems to understand this – along with the appeal of their tropical location they offer travel planning assistance, transportation, and concierge services including arranging local activities and excursions.  The leading prescription hepatitis C medications can cost nearly $100,000 in the United States for a single 12 week course of treatment.  Many employers may be surprised to hear that in light of this, as compared to simply purchasing the drug at the local pharmacy, it can actually be significantly less expensive to put a patient on a plane (with a companion) and fly them to the Caribbean for treatment, including all ancillary services and testing and prescription medications dispensed onsite, all as part of what is essentially a free vacation.  The same concept is being applied with increasing regularity to other treatment, including surgical procedures.

Just as with drug importation, there are some practical house cleaning tasks a plan must take care of before introducing any sort of medical tourism benefit, particularly if patients will be traveling internationally.  A common barrier could be any existing plan exclusions for international treatment.  This and any other conflicting exclusions must be removed and cleared with interested parties, just as with an importation reimbursement benefit.  Another consideration with a medical tourism benefit is potential conflicts with the employer’s network agreement.  Many such agreements require that the in-network incentive be the “best” available, so if the in-network coinsurance is 20%, and the plan offers a “zero out-of-pocket” option to incentivize patients to use the new program, there could be trouble.  By that same token, the limitation could only apply within the network’s service area, which would mean there is no problem.  It is important to have a professional review these agreements to make sure the employer isn’t creating any liability for itself.

While many great minds continue to grapple with the puzzle of bringing American health costs down, many patients and employers simply cannot afford to wait for a complete solution.  These globally-minded strategies are just a few of the creative ways employer plans, vendors, and providers are attempting to make care more affordable and accessible.  The potential for savings is huge, and the quality of care can be just as high as or higher than comparable treatment domestically. Ultimately, those who reap the benefits will be those who are willing to innovate, and utilize new methods and strategies outside of the traditional employee benefit playbook.