Member fails to disclose health condition

[Guest Brook]

What recourse does a self-funded group health plan have in the case of a member who did not disclose a serious health condition upon enrollment? Could they apply a 12-month pre-ex condition exclusion retroactively? Could they deny all claims based on the member's failure to disclose?

[Guest Paul]

Tough call. On one hand HIPAA says you can not deny coverage due to medical conditions. On the other hand, you can deny coverage for fraud. At a minimum you should be able to enforce the plan's pre-ex conditions if there are any. I guess it depends if it was blantent. If it was a minor condition for a dependent or spouse may be hard to prove they did not disclose.

[Guest nader12]

Just to add to Paul's comment, remember that HIPAA prohibits evidence of insurability. THus, the plan would have had to cover the individual. Further, if the person had 12 months of prior health care coverage, the pre-existing clause may be useless--sort of a no harm, no foul.

Finally, before you take an aggressive approch, be certain the employer and the stop-loss carrier are on the same page.

Mike

[Kirk Maldonado]

What does the plan say?

[Guest Brook]

The plan language has two items on point.

Under general exclusions :charges that were incurred by false application (failure to disclose)

Under general provisions: "incontestability", stating that coverage may be contested by the plan administrator for inaccurate or false information (submitted in writing, and signed, which it was) relating to proof of good health.

Those seem clear enough, but I am wondering if that plan language would withstand a challenge, particularly with the reference to proof of good health (which HIPAA forbids?). Granted the member did not disclose a serious health condition, but as I understandit the plan could only ask such a question for the purpose of determing whether pre-ex applied. Do you believe the plan could do any more than apply pre-ex retroactively?