Guarantee Issue when Plan Committed Fraud?

[Guest chloe]

I'm really hoping someone can point me to something I'm missing, otherwise we've got a big problem. We have a small employer customer which we are cancelling because the group committed fraud. HIPAA clearly allows us to terminate for fraud. However, the guarantee issue portion of HIPAA does NOT reference fraud as one of the few reasons that we would not have to quote a group. So, we could terminate them and they could turn right around and apply to us for coverage the next day and we would have to issue it. Am I missing something in the law or regs that we say we don't have to quote this group? (FYI, the state law appears to mirror HIPAA.)

[Ron Snyder]

Interesting issue. You need an ERISA attorney to answer this, not an unknown party on a bulletin board. I am an ERISA attorney and don't know the answer off the top of my head. However, I believe that you are not bound to provide coverage under those circumstances. You might also consult with your state insurance department which, although operating under a state law which mirrors HIPAA, has a wide latitude to promulgate rules and interpret the statutes.

[GBurns]

Which judge, jury or authority decided that whatever was allegedy done, constitutes fraud?

I suggest that you use a lawyer to determine what could or should be done, it is very dependent on not only the actual facts and circumstances but also on applicable law/laws of which ERISA and HIPAA should not be the only ones.