Employer sued over benefits offering

[GBurns]

I am looking for a few cases in which the employer was sued for not having a particular benefit or not communicating its vailability.

For example, the employer requested that a particular item say, bypass surgery, be limited to a maximum lifetime benefit of $50,000 on a plan that pays 80% of Schedule. This limit does not affect the premiums so it was not a decision based on cost. An employee needs more than $50,000 woth of treatment but cannot afford it, so foregoes or delays treatment which causes a bigger more expensive problem. The employee sues.

Or the item would have been employee paid, but the employee was never given the option.

Or the employer waives EAP with no cost savings or it was employee paid anyhow, and similar situation develops.

Or the employer has EAP or the limit, but neither the employee enrollment material, the SPD or Certificate of Coverage makes mention, so the employee is not aware and does not get adequate or timely treatment then discovers that it had been available all along so sues.

Does anyone know of any such cases?

[Don Levit]

You are asking a lot of questions. I will tackle the first one. I understand that employers can provide inside limits for various illnesses, as long as the limits apply to all employees.

The change can be made once a year, when the employer does his typical plan review.

Don Levit

[GBurns]

But what happens when the limits are miscommunicated or nor communicated? Or the limits are not applied to all similarly situated employees? And an affected employee sues. That is some of what I am looking for.

Basically they all make 1 question. Do you know of any cases where the employer was sued by an employee regarding benefits?

[Don Levit]

McGann v H&H Music c. (5th Circuit, 1991). The plan sponsor placed a cap on the lifetime benefits under its health plan to reduce costs associated with AIDS treatment. I believe the cap was $10,000, while other benefits had a much higher annual and lifetime maximums. This retroactive modification was deemed legal, for it affected all participants in the plan, and not just those under treatment for AIDS.

If you need help finding the case, let me know.

Miscommunication of benefits would fall under a different set of rules.

Don Levit

[Steve72]

Note that the rule of the McGann case may be altered by the new (at least, newer than McGann) HIPAA nondiscrimination regs.

As Don Levitt points out, changes in benefit offerings which would discriminate against an individual based on a health status related factor (e.g., in the McGann case, the change discriminated against an AIDS victim) need to be made prospectively on the plan year in order to avoid HIPAA issues.