Could anyone explain what timely payment regulations (and possible pen

[Guest Brook]

Could anyone explain what timely payment regulations (and possible penalties) apply to a TPA processing claims for self-funded group health plans?

[Guest nader12]

Section 503 of ERISA requires that plans set forth claim procedures. Regs under this section generally require that claims be approved/denied in 90 days (with a 90 days extension) and appeals reviewed within 60 days (with a 60 extension). The DOL has recently announced that it intends to effectuate its proposed regs which accelerate the above periods.

Although there is no direct liability for failing to timely deny a claim, there is exposure, including:

**The failure to respond to an appeal may allow a plaintiff to assert a claim for a Sec 502© penalty (up to $110/day--in the discretion of the court);

**Improper denial may eliminate the defense of failure to exhaust administrative remedies;

**Breach of fiduciary duty and possible equitable relief

**Provide a court with a reason to find in favor of the participant

**Allow the DOL to step in.

THe DOL recently found that a client failed to properly deny claims under a self-funded plan, because the employer delayed the payment of claims. The DOL did not take further action because the employer had paid the outstanding claims.

Remember, a TPA will generally respond that it is not a fiduciary and has no liability under ERISA. Depending upon the service agreement, an employer may have a breach of contract claim against the TPA.

Mike