Executive Summary: The Plan Administrator Interprets the Plan Document so that Claims are Denied, but Executive Level Member of the Plan Sponsor’s Organization Wants the Claims to be Paid; the PACE Removes Fiduciary Burden, Upholds the Plan Terms, and Negotiates to Avoid $25,000.00 in Balance Billing and Extreme Member Disruption
A Plan Administrator denied $25,000 in out-of-network claims related to injuries that were caused by dangerous, recreational activities. The Plan’s appointed Plan Administrator properly applied the “hazardous activity” exclusion; however the injured plan participant was the son of a high ranking executive level member of the Plan Sponsor’s organization. The executive was insistent that the claims should be paid, despite the fact that such payment may expose the Plan to claims of discrimination and breach of fiduciary duty, making it difficult for the Plan Administrator to uphold the terms of the Plan.
The member appealed and was denied. The member appealed again, and this time the final, internal appeal was referred to the PACE. The Plan Administrator thereby avoided a continued conflict with the executive, the PACE performed a review as part of the PACE service, (which would have cost the Plan over $3,000.00 in costs), and provided both justification for the denial as well as a concrete basis to uphold the Plan terms for the executive. As expected, the provider balance-billed the patient for the uncovered claims. On behalf of the Plan Sponsor and executive, The Phia Group negotiated with the provider on the patient’s behalf, and achieved closure of the account for a payment by the patient of 25% of billed charges (a payment of only $6,250).