employer refuses to say whether termination was involuntary; what can insurer do?

[Peter Gulia]

An employer is small enough that its health plan isn’t governed by Federal COBRA. But the relevant State’s “mini-COBRA” law applies. A former employee elects continuation coverage, and asserts that he is entitled to ARRA premium assistance. The insurer – recognizing that continuees generally, and subsidized continuees even more, are bad adverse-selection risks – has a procedure for trying to get information about whether an employment termination was involuntary. But the employer refuses to respond to the insurer’s requests for information about the termination. Is there anything the insurer can do to compel the employer to cooperate?

[401 Chaos]

Hmm. My first thought is that the group policy / contract should have something in there requiring the employer to cooperate with the insurer's reasonable information requests. Also, seems the insurer might be able to threaten cancellation of the policy without cause if it feels the employer is not being honest. I would think though that reminding the employer of the criminal penalties associated with fraud / insurance fraud might be enough to get some movement.

We faced something of a similar issue for a group that was covered by COBRA where an individual was involuntarily terminated just before COBRA subsidy started. The HR director properly (in my opinion) said the individual was not eligible. The former employee, however, appealed on some grounds that his severance pay actually should be construed as having him on active payroll. When the DOL came back to the employer to ask for additional information, the HR Director's boss told her not to provide anything to the DOL so the company would not stake itself out on the issue and all the DOL had to go on was the former employee's characterization. In that situation, we worried about what, if anything, the DOL could or would do to the employer for failing to respond. They were persistent in their attempts to follow up with the employer for more information but they didn't get anything. The DOL ruled in favor of the former employee without any issues. I still think the insurer there might have a claim against the employer.