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Will Sex Discrimination be Re-Defined?

By: Erin M. Hussey

Section 1557 of the Affordable Care Act (“ACA”) prohibits discrimination on the basis of race, color, national origin, sex, age, or disability with regards to certain covered entities’ health programs. A covered entity is one that receives federal funding as outlined in the ACA.

The US Department of Health and Human Services (“HHS”) has issued a proposed rule that would revise the regulations implementing and enforcing Section 1557. This proposed rule, among other things, would essentially allow HHS not to include “gender identity” and “termination of pregnancy” within the definition of “sex discrimination.”

By way of background, HHS’s 2016 regulation on Section 1557 redefined sex discrimination to include gender identity and termination of pregnancy. However, on December 31, 2016, a US District Court issued a nationwide injunction on certain parts of Section 1557, including gender identity and termination of pregnancy, and that injunction is still in effect. As such, this proposed rule would follow suit with that injunction. HHS details that this part of the proposed rule would “not create a new definition of discrimination ‘on the basis of sex’ . . . [but] would enforce Section 1557 by returning to the government's longstanding interpretation of ‘sex’ under the ordinary meaning of the word Congress used.”

In addition, plans that are not directly subject to Section 1557, must still ensure that the employer sponsoring that plan remains in compliance with Title VII of the Civil Rights Act. Title VII prohibits employment discrimination based on race, color, religion, sex and national origin. The Equal Employment Opportunity Commission’s (“EEOC’s”) interpretation of its prohibition on sex discrimination includes discrimination based on gender identity and sexual orientation. However, there have been similar discussions of whether sex discrimination should be redefined under Title VII. HHS detailed this issue in their fact sheet on the proposed rule:

“On April 22, 2019, the U.S. Supreme Court granted petitions for writs of certiorari in three cases, which raise the question whether Title VII’s prohibition on discrimination on the basis of sex also bars discrimination on the basis of gender identity or sexual orientation.”

Therefore, while we wait to see if the proposed rules on Section 1557 are finalized, and for the outcome of the above-noted Supreme Court cases on Title VII, applicable health plans should remain cautious with regards to benefits and exclusions that may implicate sex discrimination issues. If you feel as if you are being discriminated against and would like to negotiate a fair rate, visit our claim negotiation page to learn more. 


How About Some Evidence? - Montanile v Board of Trustees

By: Christopher Aguiar

Despite the Supreme Court’s decision in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, 577 U.S. in 2016, some benefit Plan sponsors still question the need for a robust approach to third party liability.  In Montanile, the Court stated in no uncertain terms that it would not give benefit plans a remedy if they sat on their hands and were not proactive in their efforts to recover third party settlement.  In pertinent part, the Court stated:

… The Board protests that tracking and participating in legal proceedings is hard and costly, and that settlements are often shrouded in secrecy. The facts of this case undercut that argument. The Board had sufficient notice of Montanile’s settlement to have taken various steps to preserve those funds. Most notably, when negotiations broke down and Montanile’s lawyer expressed his intent to disburse the remaining settlement funds to Montanile unless the plan objected within 14 days, the Board could have—but did not—object. Moreover, the Board could have filed suit immediately, rather than waiting half a year. …

Indeed, the Court seemed to give no deference to the Plan’s concern, i.e. it wasn’t necessarily about this case, rather it was about the burden that would be imposed on health plans if left with no remedy against a participant who takes liberties with his/her obligations and spends money that is to be held in trust on the plan’s behalf.  It should be no surprise that in all my years working on behalf of benefit plans, I can recall a handful of times where I, personally, had to step foot into a court, and virtually all of them were in jurisdictions where the law requires that the Plan be a named party to the dispute; yet in the past 6 months, I’ve had to step in front of a judge 3 times and just last week was summoned for a 4th.

It's a sign of the times.  The Court imposed a duty on Plans to be proactive in their tracking and participation in recovery and legal proceedings.  Identifying cases is the first step to recovery and if plans don’t have a good solution for it, it risks holding the bag either because it didn’t know about the recovery opportunity in the first place, or knew because the participant was forthcoming with information, but the plan didn’t have the resources and understand how to execute.

Let’s not even get started on what the Plan’s fiduciary obligations might be in these instances …


U.S. Supreme Court Rules Against Subrogation Rights … What Now?!!
EARLY IDENTIFICATION, INTERVENTION AND STRONG PLAN LANGUAGE HAVE NEVER BEEN MORE IMPORTANT!!!
In the last hour, The Supreme Court of the United States issued an 8-1 decision in favor of the plan participant in the case of Montanile v. Board of Trustee of the National Elevator Industry Health Benefit PlanIn the last hour, The Supreme Court of the United States issued an 8-1 decision in favor of the plan participant in the case of Montanile v. Board of Trustee of the National Elevator Industry Health Benefit Plan (Click to read the decision). In the latest case regarding subrogation to reach The Highest Court in the Land, The Court ruled that the Plan could not recover from Montanile after he received a third party settlement and spent the money. Make no mistake, third party recovery just got much more difficult. If benefit plans don’t have air tight language, and proactively intervene before a plan participant spends settlement proceeds, the Plan is out of luck! The Phia Group is here to help!

Contact Us at PGCreferral@phiagroup.com to learn more about what you can do to protect your Plans’ Assets!

“Learn With Us, Plan With Us, Save With Us. Protect the Plan”

Supreme Court of California Case Notification for Children’s Hospital Central California v. Blue Cross of California
In an important legal development in the healthcare cost debate, the California Supreme Court has denied a petition for review of the recent decision in Children’s Hospital of Central California v. Blue Cross of California, 226 Cal. App.4th 1260 (2014). You’ll recall that a few months ago, a California appellate court reversed a decision by the trial court holding Blue Cross responsible for the full billed charges because the jury found that an implied-in-fact contract existed between the Hospital and Blue Cross. In so doing, the jury awarded the hospital $6.6 million in addition to the $4.2 million Blue Cross had already paid, totaling a payment of $10.8 million. This decision set up a potential showdown in the California Supreme Court; but the showdown is not to be. As a result benefit plans get important legal support for the proposition that a hospital cannot be paid an amount simply because they charge for it.

See the full appellate decision here.

Stay tuned as the the California courts try to determine on remand what should be considered when determining the “reasonable and customary” value of services rendered.

Supreme Court upholds ERISA plan document statute of limitations
By Andrea DavisIn

What can be viewed as a victory for plan sponsors, the Supreme Court ruled on Monday that statute of limitation periods written into plan documents are valid, as long as those periods are “reasonable.” The court, however, declined to define “reasonable.”

Read More...

How the Supreme Court’s ruling on DOMA affects self-funded plans
By Jennifer McCormick, Esq. and Corrie Cripps (The Phia Group, LLC)

Background: United States v. Winsdor

On June 26, 2013, the U.S. Supreme Court in United States v. Windsor struck down “Section Three” of the Defense of Marriage Act (DOMA), which prevented the federal government from recognizing any marriages between gay or lesbian couples for the purpose of federal laws or programs, even if those couples are considered legally married by their home state. The other significant part of DOMA makes it so that individual states do not legally have to acknowledge the relationships of gay and lesbian couples who were married in another state. Only the section that dealt with federal recognition was ruled unconstitutional.

Potential implications for plan sponsors and administrators of self-funded medical plans

ERISA plans
• Nothing in Windsor appears to have altered how self-funded ERISA plans establish their rules regarding eligibility. Self-funded ERISA plan sponsors continue to have broad discretion in determining the class of beneficiaries who are entitled to benefits.
• Plan sponsors/administrators should ensure that any references to DOMA in their plans’ spouse or marriage definitions are removed.
• Plans that operate in states that recognize same-sex marriages should ensure that their plan’s definition of spouse clearly states the plan’s intent so there is no confusion among the plan’s participants.
• Regardless of the plan’s eligibility requirements, same sex partners are eligible for the FMLA in the 13 states that recognize same-sex marriage.

Non-ERISA plans
• Plan sponsors/administrators should review plan documents, summary plan descriptions, employee handbooks, benefit notices, and policy manuals for compliance with state laws, and to ensure clear communication regarding treatment of same-sex spouses.

DOL Technical Release 2013-04

DOL Technical Release 2013-04, issued September 18, 2013, provides that wherever the Secretary of Labor has authority, it is the intention of the DOL that: (1) The term spouse shall mean any individual “who is lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who were domiciled in a state that does not recognize such marriages.” and (2) The term marriage shall include “a same-sex marriage that is legally recognized as a marriage under any state law.”

TR 2013-04 indicates that recognition of “spouses” and “marriages” based on the validity of the marriage in the state of celebration, rather than based on the married couple’s state of domicile, promotes uniformity in administration of employee benefit plans and affords the most protection to same sex couples. TR 2013-04 does indicate that the term spouse and marriage do not include individuals in a formal relationship recognized by a state that is not denominated a marriage under state law, such as a domestic partnership or a civil union.

Timeline and application of DOL TR 2013-04 for ERISA plans

DOL TR 2013-04 does not indicate an application date; it states that the Department’s Employee Benefits Security Administration (EBSA) intends to issue future guidance addressing specific provisions of ERISA and its regulations.

However, IRS Revenue Ruling 2013-17 provides a prospective application date of September 16, 2013 (as it relates to tax issues). Further, the IRS provides that it is their intention to issue further guidance on the retroactive application of Windsor. In addition, the IRS ruling provides that they anticipate that future guidance will provide sufficient time for plan amendments.

• A conservative approach to the DOL TR 2013-04 application would be to align with the IRS application date of September 16, 2013. Thus, suggesting the modification of the definition of spouse and marriage for plan years beginning on and after September 16, 2013.
• An alternative approach to the DOL TR 2013-04 application is to only implement the DOL’s definitions of spouse and marriage if the plan’s current language is vague. For example, some plans reference their particular state’s definition of a legal spouse, which is acceptable; however, plans should no longer reference DOMA in their definition.

As with all general guidance, each employer should consider these issues in light of its own business needs and plan designs. Phia Group Consulting can assist plans in determining which approach best meets the plan’s needs.