McKean Evans

ERISA Plans Can’t Discriminate Against Domestic Partners, Court Rules

In Washington, and many other states, domestic partners enjoy the same rights and legal protections as spouses. The Ninth Circuit Court of Appeals recently confirmed that domestic partnerships’ equal treatment under state law extends to ERISA plans.

ERISA plans typically give the plan administrator broad discretion to interpret the terms of the plan. This often means the plan administrator has huge leeway in deciding who qualifies for benefits under the plan. If the plan document leaves any room for interpretation, courts often defer to the plan administrator’s decision about who gets benefits, even if the decision seems unfair or counter-intuitive.

The Ninth Circuit’s decision in Reed v. KRON/IBEW Local 45 Pension Plan ruled that ERISA plan administrators’ discretion does not extend to discriminating against domestic partners when deciding who qualifies for benefits under the plan.

In Reed, David Reed and Donald Gardner had been in a committed, long-term relationship for decades, ultimately becoming domestic partners. Gardner subsequently retired and began receiving pension benefits under the ERISA pension plan sponsored by his former employer KRON television. The KRON ERISA plan entitled the spouses of pensioners who passed away to surviving spouse benefits.

After Gardner passed away, Reed filed a claim for surviving spouse benefits. KRON’s plan administrator denied Reed’s claim. The plan administrator claimed it was within its discretion to interpret surviving spouses as excluding domestic partners.

The court acknowledged that ERISA plan administrators are entitled to broad discretion, but nevertheless ruled in Reed’s favor. The court noted state law “afforded domestic partners the same rights, protections, and benefits as those granted to spouses” and nothing in ERISA required otherwise. The Court ordered the ERISA plan to pay surviving spouse benefits to Reed.

The Reed case is an important reminder that ERISA plan administrators’ discretion is not unlimited, and also represents an important victory for domestic partners.

Washington State Bans Surprise Medical Billing

We previously blogged about the push by Washington’s Insurance Commissioner to ban so-called surprise medical billing, i.e., where an insured gets hit with a huge bill for medical treatment despite going to an in-network provider or seeking emergency care. In those circumstances, the insurer claims the hospital’s bill is too high and refuses to pay, and the hospital bills the patient for the difference. This practice (known as “balance billing”) results in the policyholder getting a huge hospital bill for medical care that was covered by their insurance policy, even if the policyholder used an in-network provider and did everything right. In these situations, the patient is stuck in the middle with the insurer and the hospital each blaming the other for the huge balance bill.

Washington’s surprise medical billing ban has now been signed into law by the Governor. The new law is touted as one of the strongest legal protections for health insurance policyholders and patients in the country.

Among other things, the surprise medical billing ban includes the following:

Bans balance billing where you receive emergency medical treatment, even if it’s at an out-of-network facility – this includes seeking emergency medical treatment in a state bordering Washington State;
Bans balance billing where you obtain treatment from an in-network provider, regardless of whether it’s an emergency;
Requires insurers to pay out-of-network providers directly (as opposed to leaving the policyholder to fend for themselves.

One of the most significant reforms is that the new law requires insurers and medical providers to resolve billing disputes between themselves, rather than leaving the patient to deal with the excess bill from the provider. This is a huge win for policyholders and patients because it means patients are no longer left holding the bag when the insurer and doctor disagree over the medical bills. Insurers and hospitals have the resources to fight medical billing disputes and the bargaining power to keep them from happening in the first place – patients do not. The new law fixes a major injustice by preventing insurers and providers from imposing on patients the burden of resolving medical billing disputes.

Washington’s surprise medical billing reform is a big step forward for patients and health insurance policyholders.

Insurance Tips for Wildfire Season

Washington is predicted to have a particularly severe wildfire season in 2019. Wildfires are increasing as development pushes further into wilderness areas and wildfire risk pushes into parts of Washington previously assumed to be too wet to be at risk.

Here are some tips to make sure your insurance coverage is ready for wildfire season:

Read your policy and confirm it covers wildfire damage. Most homeowner’s insurance policies traditionally covered fire damage. But some policies exclude wildfire or disaster related losses.
Confirm your coverage limits are sufficient. If you bought your home many years ago, rising property values and construction costs may render your existing coverage inadequate.
Make sure your policy covers your entire loss in the event of a wildfire. For instance, confirm your policy will pay your living expenses in the event you need to relocate while your home is rebuilt (known as “Additional Living Expense” coverage).
Make an inventory of important and valuable contents to make sure the insurer covers the cost to replace these items in the event they are lost in a wildfire.

Finally, be ready to go to bat and make sure you get the coverage you are paying for. . After a big disaster like a wildfire, there are so many claims insurers can’t investigate them all properly, so they just stop trying. Disaster-related insurance claims are notorious for shoddy investigating, unresponsive staff, and overworked, poorly-trained adjusters pressured to cut corners to close out claims fast.

Five Common Homeowner’s Insurance Policy Provisions and Why They Matter

Most folks have homeowner’s insurance (or its cousin renter’s insurance). Homeowner’s insurance protects you from damage to your home (e.g., your house burns down) or from claims arising from someone’s injury on your property. (e.g., someone slips and falls in your backyard).

Homeowner’s insurance policies typically contain about 20 pages of fine print. Depending on the specific language, your coverage and your duties after a loss can vary dramatically. Here some common important provisions to look for and why they matter.

1. Provisions defining the covered property. The address on the declarations page may not necessarily identify the property covered by the insurance policy. For example, if you aren’t living in the property, the policy may not provide coverage even if the property is listed on the declarations page. Some policies contain owner-occupancy provisions stating, for instance, “this policy covers the owner-occupied property listed on the declarations page.”

2. Provisions explaining what parts of the property are covered. In addition to the main house, homeowner’s policies often provide additional coverage for ancillary structures on the property like sheds or garages. Some policies provide coverage for all other structures on the property regardless of whether they were attached to the main house. Other policies limit coverage to only structures that are physically connected to the house.

3. Business Use Coverage. Insurers often deny coverage where the property has been used for business purposes. The policy fine print is important to understanding whether and to what extent the property’s use for business purposes allows the insurer to deny claims. Some policies exclude any use of the property for business purposes such as renting the property out to tenants or running an office at the property. Others only exclude business use from specific coverage; for instances, renting the property to tenants might exclude claims if the tenant sues you because they slip and fall, but might not exclude coverage if the property burns down.

4. “Actual Cash Value” versus “Replacement Cost Value”. If your house burns down, there are two ways to evaluate the dollar amount of your loss. One way is to ask what the house was worth right before it burned down; this is the “Actual Cash Value.” Another way to look at the loss is to ask what it would cost to rebuild the house; this is the “Replacement Cost Value.” Typically, Replacement Cost Value is much higher than Actual Cash Value. Your homeowner’s insurance policy will have detailed provisions for when the insurer pays Actual Cash Value versus Replacement Cost Value; often, the insurer will pay Actual Cash Value up front, then pay the remainder of the Replacement Cost Value once you complete repairs or replacement. But insurers often miscalculate the Actual Cash Value, leaving you without sufficient funds to repair or replace the property and thereby stopping you from collecting the additional Replacement Cost Value. It’s important to read these policy provisions carefully and make sure the insurer follows them.

5. Additional Living Expenses. Many homeowner’s policies cover your Additional Living Expenses, i.e., the extra costs you incur because you can’t use part of your home while it is damaged. Additional Living Expenses might include living in a hotel while your home is repaired. The specific policy language is critical because insurers often dispute whether an insured is entitled to Additional Living Expenses after a covered loss. For example, if a fire is put out before it burns down your home but the home is full of smoke and water damage, is the property “liveable?” What if the only damage is to the living room but you can’t use the entire first floor of your house during the repairs? Understanding the specific policy language is important to knowing your rights in these situations.

Ultimately, the only way to know for sure what your rights under an insurance policy are is by consulting an attorney. Hopefully, this guide can point you in the right direction.

Washington State Enacts “Public Option” Health Insurance Plan

This week, Washington State passed a new law designed to offer consumers a so-called “pubic option” for buying health insurance. The general idea is that the state will launch its own health insurance program to compete with the marketplace. Unlike Medicare or Medicaid, anyone would have the option to purchase coverage through the “public option.”

The public option is targeted at taking the pressure off of people who don’t receive health insurance through their employer, but make too much money to get subsidized coverage through the Affordable Care Act (a/k/a Obamacare). Folks in this situation, often small business owners or the self-employed, have struggled with substantial premium increases in recent years.

The public option is not true insurance. Instead, Washington State will contract with insurance companies to administer the system under the state’s control. The main idea is that the public option caps the amount it will pay doctors, hospitals and other medical providers at 160% of the rate Medicare would pay for the same services. Medicare rates are typically quite low compared to what an uninsured patient would pay.

The public option is hoped to avoid the steep premium increases that have become an annual routine for most health insurance. Rates increased 13.8% in 2019; they increased 36% in 2018.

Other states, including Colorado and Connecticut, are considering similar legislation.