Posted by Matt Garretson
I’m looking at a Form 5500 on a plan where I’ve received notice of a reimbursement claim. At line 9a of Form 5500 the boxes for both “Insurance” and “General Assets of the Sponsor” are checked as to the funding arrangement, and at line 7 of Schedule A, the box for “Health” is checked. If there is any self funding, does that bring the plan within 29 USC§ 1144(a) with respect to preemption?
Also, this was a 2008 injury, but the 2008 form 5500 is not yet on FreeErisa.com, just the one’s for ‘06-‘07.
It is possible that “Insurance” is checked b/c the plan purchased stop loss insurance. In the past, courts have held that the existence of stop loss does not bring the plan under the cover of state insurance law b/c the insurance is meant to cover the plan and not insurance the plan beneficiaries. So, as a general rule, the existence of stop loss doesn’t mean the plan cannot avail itself of ERISA preemption. BUT, you should investigate the “stop loss trigger” threshold… In recent opinions, courts have said if the stop loss trigger is under $25K, then it is really acting like insurance on the beneficiaries and should be subject to state law (it is worth investigating and perhaps arguing). Also, you should argue that the state law defenses are still valid against any portion of your client’s medical expenditures by the plan that were covered by the stop loss policy.
I hope that helps. Mark Maughan runs our single event lien resolution operations and can be available to assist should you need us!