Named Fiduciary under the new DOL Claims Regulations for appeal determ

[Guest JulieJ]

I pose my question generally to everyone, but more specifically to independent TPAs administering self-funded ERISA plans or employers who use independent TPAs for claims administration of their self-funded ERISA plans.

Under the new DOL Claims Regulations, it sets forth how appeals are to be handled.

In Section 2560.503-1(h)(1) of the Regulation, it states, "(h) Appeal of adverse benefit determinations. (1) In general. Every employee benefit plan shall establish and maintain a procedure by which a claimant shall have a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary of the plan, and under which there will be a full and fair review of the claim and the adverse benefit determination."

The key phrase I am focusing on is "an appropriate named fiduciary of the plan."

Here is the question: Are TPAs out there assuming the role of "named fiduciary" when it comes to making appeals determinations?

I know that most employers have hired the TPA to "take care of the plan" and make decisions for them with final consult occurring with the plan administrator ONLY if a big issue comes up about a claim.

However, under a strict reading of the Regulations, it is the named fiduciary who is ultimately responsible for making ALL appeal determinations; not just the final and binding decision. I received non-binding comments from the DOL that that is how they view it as well.

I understand that most big insurance companies can and do assume a fiduciary role with their clients' plans. What about the smaller, independent TPAs out there? Can they or will they be willing to assume that fiduciary role for the clients? Will their E&O policy allow for it?

If the TPA will NOT assume the fiduciary role, what are they telling their clients? What is the reaction?

Any insight anyone might be able to provide would be most helpful.

Thanks!

[mbozek]

I have always understood that the person who has the final authority to pay or deny the claim is the fiduciary. Anything that is not binding is not reliable.

[Guest JulieJ]

However, many plans have more than one level of appeals. If the TPA does the determination on the first level of appeal and the Plan Administrator (named fiduciary) does the second and final appeal, the TPA will still be deemed a fiduciary of the Plan by doing that first level of appeal determination.

If deemed a fiduciary, then the TPA will be held to the same standard as the plan administrator in terms responsibility under ERISA. It is not about reliability of the determination it is an issue of responsibility and liability being taken on by the TPA by making such determinations.

[jeanine]

The TPA can still limit the extent of its duties to be considered a fiduciary only for the purpose of claims determination. If all the TPA is responsible for is the first level of appeal, I don't see what the problem is. There is still one more level of appeal for a final determination by the Plan Administrator. The issue's going to be those circumstances that require a final review within 72 hours (urgent pre-service claims). You need to act to set up an arrangement where you are compensated by the Plan Administrator so that you can offset any additional liability.