Jump to content

Could anyone explain what timely payment regulations (and possible pen

Guest Brook

Recommended Posts

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

Link to comment
Share on other sites

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.


Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...