Divorce Decree makes Plan Secondary Payor...but ex-spouse ignores obligation to provide coverage

[mal]

Plan is a multiemployer, self-funded ERISA arrangement. Our participant "P" was divorced about 11 months ago. Order provides for a joint custody arrangement and for BOTH parents to provide health coverage on behalf of the children. The ex-spouse "X" has health insurance available through work but has elected not to cover the children.

Under the Plan's COB rules, X's plan should be the primary payor, but since she

has ignored the order, our Plan is paying benefits.

What is the recourse for the Plan? Keep in mind that we are not a party to the divorce decree and P has done nothing wrong. The children satisfy the new IRS definition of dependent and if it weren't for the decree, the Plan would cover them with no questions asked.

The most popular idea to this point is to continue to cover the children, but inform P that he must bring a contempt action against X or face the risk that the plan will begin paying only secondary to the plan that should be in place.

Ideas??

[Guest georgia]

unless you have access to each and every employee's divorce decree and/or other court orders, and unless you intend to actively police the parties compliance with all of those orders, why wouldn't you just let it go...

[mbozek]

Making your plan a secondary payor in the absence of other ins coverage for the children will violate the terms of your plan and expose the plan/employer to a claim for benefits and possible violation under 510 of ERISA.

[SoCalActuary]

Your plan is being harmed by the behavior of 'X' since your plan is paying more than it should. If the numbers are large enough, your attorney should send a formal notice to 'X' and their employer, indicating that they must honor their contract (the QDRO).

[mbozek]

Sending a letter will be meaningless because P's plan cannot force X to add her children to her ins. (which will cost her money out of her pocket).

[jeanine]

Send your "P" a COB letter informing that all claims are pended until completion of COB (you may have already done this and this is why you have the divorce decree). Then P should send the divorce decree to X's plan and ask if it is satisfactory as a QMCSO. If not, P must go back to court and get a QMCSO and send to X's employer. At that point, X will be forced to cover the children as long as certain conditions are met. X's plan administrator can add them to coverage and withhold premium contributions even if X objects pursuant to a valid QMCSO.

[QDROphile]

Until the plan establishes that it has some rights in the matter, which is questionable at best, the plan had better not withhold or delay benefits or payments or give any "instruction" or threat to the particpant about action that the participant should or must take. The plan can get into big trouble if the plan meddles where it should not or compromises the rights or benefits of the participant when it has no right to do so.

I am amazed at the helpful comments of the armchair lawyers out there.

[GBurns]

I would think that the Plan/Employer/Plan Sponsor does have rights in this matter ...it is the Plan Sponsor for the participant "P", and is the Administrator informing a plan participant and beneficiary of the Plan's terms and conditions (the COB provision) and it is the claims payor notifying them of possible future denial of claims and loss of coverage under the Plan's COB provisions.

How does this involve "armchair lawyers" ? Where this is even the rendering of legal advice?

[Kirk Maldonado]

I second QDROphile's comments.

[jeanine]

If the plan has a COB provision it has every right to pend claims based on receiving COB information.

[mal]

By way of update...

The Plan is only "meddling" because the participant brought it to the administrator's

attention. He does not want to be involved in a legal dispute should one of

his children suffer a catastrophic illness or injury.

The consensus on this end is that the Plan is not a party to the divorce action and has no standing to compel the ex-wife to do anything. There is also no clear plan language that would allow us to act as a secondary payor. Therefore, we have requested our participant to ask the local Child Support Enforcement Agency to send the medical support notice to his ex-wife's employer. If successful, this will require the employer to withhold the costs of coverage from the ex-wife's salary. In the meantime, we will continue to pay on a primary basis.

One interesting angle that was explored involved using the Plan's broad subrogation language to "step into the shoes" of the participant and bring a contempt action in state DR court. Ultimately, we decided it was not practical to get involved in a murky court battle when the CSEA option was available. Aside from Great West and Qualchoice we would have faced issues of standing, preemption, etc.

[david rigby]

.... legal fees, hassles, etc.

[Kirk Maldonado]

jeanine:

You missed the issue. The plan has the COB information.

The plan wasn't a party to the divorce decree, so it has no right to enforce the terms of the divorce decree.

You should read QDROphile's post again (or maybe for the first time).