Retroactive Change to COBRA Plan in 2002

[COBRA2002]

What is the name of your state? Massachusetts

This story starts in 2002. I became seriously ill and began treatment to try and get well. Everything was Ok until very late in 2002 when I all of a sudden learned that my COBRA plan had been retroactively changed by my former employer, which left me high and dry and holding the bills related to benefits that were unquestionably in existence at the actual time of treatment. (Just to reinforce this last bit, I had been undergoing a series of treatments, some of which were covered and paid for in months not affected by the retroactive change, which clearly establishes a pattern of coverage.) Put mildly, I would have had to have been clairvoyant to see this all coming.

My former employer's stance to date has been to -- in essence -- ignore the matter. I tried contacting them in late 2002 and was basically ignored. The pattern of behavior has been consistent throughout, which has been exacerbated by the following:
1) Clearly ignoring their fiduciary responsibility to honor benefits that were only affected by their own 'interference' – benefits in place at the actual time of treatment would have covered treatment
2) Failure to notify me of the change – timely notification, even though retroactive, might have given me enough time to make alternative arrangements for coverage
3) Failure to provide plan documentation – they failed to produce any documentation for 20 months, past the point I had already filed a lawsuit
4) Insufficient 'medical review' of the situation upon direct appeal – they simply did not investigate the matter (see below)

I have continued to press this matter ever since and have already begun the process of suing them in Federal Court on ERISA / COBRA. Needless to say, I am here because I am pursuing the matter Pro Se, i.e. 'for self', and could use some assistance. In our initial Scheduling Conference the Judge, upon hearing a quick summary from me, said, ‘Well, there’s got to be something wrong with that [i.e. denying benefits solely impacted by a retroactive change]’.

I have founds some really great posts and responses on this site. Wish I had found it a long time ago. Is there anyone out there that is willing to offer some perspective / advice ?

FYI, the only relative 'bright spot' in this whole matter was when I was finally enrolled with BCBS. BCBS was contracted by my former employer to retroactively cover all persons over the period in question. Somehow or another this was all done in late 2002 but I was missed. This turned out to be a false 'bright spot' as a little further down the road BCBS declined coverage employing a 'not approved by the FDA' rationale. This, however, is obviously moot as the benefits were in place at the time of treatment, which would then ultimately place any and all responsibility squarely on the shoulders of my former employer to 'make whole' the benefits they interfered with. Well, as you might have guessed, my former employer simply lifted the 'not approved by the FDA' excuse and repackaged it as their own rationale for denying benefits.

There’s more to offer in the way of facts, evidence, et cetera, but I think this does for now.

Any help ?

 

[cbg]

I suspect this is going to be far too complicated to handle on a message board. But I'll see what I can do.

I'd like a little more info about the retroactive COBRA change. Was the change made to just you, or to everyone covered on your initial plan? And if just you, how far back did the change go?

Did you ever file a complaint with the Federal DOL? That might have been a better way to go than by filing a lawsuit yourself.

 

[COBRA2002]

I admit this has gotten pretty complicated . . . The change was made to the entire plan. What they had done -- and I only learned this much later via my own investigation -- was retroactively switch from one carrier to another. In all fairness, I was probably just lost in the mix (but that that does not excuse the fact it's been two and a half years and the matter is still not resolved). I originally found out about this because I had been harping the original carrier for a Letter of Credible Coverage and quite suddenly one day my termination date was mysteriously backdated.

The change covered, ironically, the last month of my COBRA coverage. The actual change was made retroactive by about a month relative to the actual date of cancellation. Though a short amount of time transpired, some rather expensive treatment was incurred along the way.

I did try to work with the DOL and found them very unhelpful. It seems from my quick recollection that they would investigate if there were others that were impacted. They did call the employer, and by virtue of the Freedom of Information Act, I was able to obtain some fairly damning case notes. Maybe I just had an unhelpful agent ?

 

[cbg]

Part of the problem you're going to face, and probably what was part of the problem with the DOL, is that you are only entitled to what the active employees receive. If they made the change to their coverage, they legally HAD to change your coverage as well. They CANNOT legally leave you on the old coverage if the active employees have been changed to a new.

I can't quite tell about the retroactive angle. Having more than once had to administrate the changeover from one plan to another I can tell you that there are often quite legitimate reasons why such a change might be made at the last minute. I have to admit, I've never made a retroactive change, but I once came within two days of it. I can understand how it could happen. I'm not saying they were right; I'm not saying you have no case (I don't know if you do or not) but I'm saying I can very easily understand how it could happen that coverage would have to be changed retroactively for up to a month. Any longer than that, I wouldn't buy, but I don't have any trouble understanding how a company, particularly either a very big or a very small company might find themselves in that position. It happens very, very frequently that negotiations at renewal go right up to the very last minute - I mean if the policy is due to change on July 1, they're still in negotiations on June 29. (That's the latest I've ever gone but I can see it going on so that negotiations aren't finalized until July 10.) Obviously they can't send out any notifications in advance of a change when they don't have the rates yet.

What do the case notes say?

 

[COBRA2002]

Well, the DOL case notes cover a number of points, which are as follows.

1) My former employer admitted on two, separate occasions never having notified me of the change in insurance carriers.
2) My former employer acknowledges that they would be required to honor benefits if the particular benefit would have been covered.
3) My former employer was told that an insurance agent's hypothesis or theory is not adequate grounds for denial of benefits and that an arbitrary denial may be a violation of ERISA.
4) My former employer understands that they face "responsibility for failure to send a timely notification of change in policy".

There are some other points, but these are the key ones.

 

[cbg]

And you say the DOL was not helpful?

I'm not altogether certain that #2 is correct, but if the employer is acknowleging it, that's all well and good for you.

I guess I'm not sure at this point what you're looking for.

 

[COBRA2002]

You have to understand the above was conveyed in the written notes. Any verbal communication did not convey the level to which the Agent apparently counseled my former employer on what their obligations were nor articulate the admissions my former employer had made (but never made to me). I do not even know what a DOL Agent is empowered to do . . . any light you can shed on that ?

Why do you think #2 is questionable ? FYI, my research has told me that -- in the case of retroactive changes -- past benefits can not be 'taken away', which would seem to be common sense . . . If they are there when you walk into the Doctor's office, how can they disappear after-the-fact ? Not trying to challenge . . . just passing along what I have found. Curious on your take.

The purpose of posting is many-fold. 1) Looking for a lawyer to help -- I am right now doing this Pro Se, and that's problematic if only because of limited experience in court. 2) Looking for related experiences and / or supporting guidelines / law people can point me toward. 3) Suggestions on strategies moving forward -- It seems pretty clear they admitted failure to the DOL but are insistent on ignoring the problem so, how do I motivate them to offer a proper remedy ? 4) VERY, VERY HELPFUL -- Any firsthand experience related to the 'offenses' outlined in my original post, i.e. cases, judgments / penalties, et cetera.

I wish this had not gone legal. It's really an extraordinarily simple problem that my former employer has allowed to mushroom into a 2-and-one-half-year struggle to obtain benefits that, ironically, I confirmed at the time were in place to cover the exact treatment in question.

 

[COBRA2002]

CBG, what's your background ? Maybe that would help me understand how you might be of assistance.

 

[cbg]

I'm a human resource consultant with 25 years experience in administering group health insurance plans and all associated laws, such as COBRA.

Please don't misunderstand. I'm not trying to discourage you. It's only that it's extremely difficult to fathom what is going on without access to the same information you have. And it's not necessarily beneficial to your case, for you to post some of the information I'd want on a public board, so I hesitate to ask you.

With regards to #2, there's a fine line here. It is NOT true that benefits can NEVER be taken away; if a new plan does not offer all the same benefits, going forward the employer is not responsible for paying them. The question here is the non-notification and the retroactive nature. I'm by no means suggesting that the employer has no responsibility. I'm saying I'm not 100% certain that it's mandatory under the law that he pay them. I could be mistaken. However, it's a moot point since you say the employer has acknowledged his responsibility. Whether it's voluntary or not is somewhat irrelevant.

From what you have posted as to what you are looking for, I'm not certain I'm going to be able to be of any further assistance to you. I'm not an attorney; I have not had a similar experience; I'm hesitant to offer strategies without information that it would not be in your best interest to post. If you want me to continue let me know; otherwise I can only wish you well.

 

[COBRA2002]

I had forgotten to say thank you for taking the time to think about this and respond so, I'll say it now. Thank You !

Now knowing you're an experienced HR person, I would like to know if you've ever had experience with the situation of 'failure to notify'. I have read some case law and the relevant federal statute and found that there are federally mandated penalties that can range up to $110 / day. Granted, it does seem that seldom is someone actually awarded $110 / day, but if found guilty, the guilty party (health insurance company / employer) can expect to face fines ranging from $20-50 / day. Do you have any experience with this ? Or have any perspective on the federal statute that is in place whose exact purpose is to motivate a company to do what it's supposed to 'or else' ?

FYI, your comments are welcome, and I understand you are not an attorney. I perhaps more than anything else need to know if I have headed in the right direction. Never wanted to take this to Court, but now that it's there I need to make sure I prove myself right. Better to know right now any argument's weaknesses rather than in front of the Judge.

Thanks again for you assistance. You help is much appreciated.

 

[cbg]

I have no personal experience with it, no. (I like to tell people that I have no personal experience with several Federal laws because the employers I work for don't violate them ) My understanding of the law you're referring to is that it's invoked when an employee has first left their job and is not notified of his right to elect COBRA. I've never heard of it being invoked for failure to notify an employee of changes to the plan. I'm not saying that it CAN'T be used that way - just that I've never heard of it being invoked for that purpose. It seems perfectly reasonable to me, though - I don't see any reason you shouldn't at least give it a try.

 

[COBRA2002]

Well, I should have worked at YOUR business If this stings a bit, it’s partly because I was an executive with this company and helped it get to where it is today. Certainly not my ideal on how employees should be treated . . .

In a similar vein to the above, what about access to plan documentation ? I understand failure to produce plan documentation when naturally required to do so, i.e. enrollment, et cetera, and especially when asked to do so is a serious offense . . . or at least that’s what my research tells me. Any perspective on this point ? FYI, my former employer did not produce documentation when clearly asked to do so.

Also, you had mentioned that the DOL is a helpful resource. Given my bad experience with them, could you offer any tidbits from your perspective as to what they are actually empowered to do ?

Every little bit helps. Thank you.

 

[cbg]

I've always found the DOL to be an extremely helpful resource. However, I've also found that their information officers are not always fully knowlegable about the law. On one occasion I was given information about FMLA that I have subsequently found was not just misleading, it was downright inaccurate, and a lawyer friend of mine found the statute that proved me right and the officer at the DOL wrong. On another occasion, I was given information that was not incorrect, but not applicable to my situation either, and it wasn't until I said something like, "I thought the law said that..." and explained how I thought it related to the situation I was questioning, that I got the info I needed.

Those, however, were exceptions rather than the rule. Most of the time when I call them with a how-should-I-proceed question, the information I get is accurate and helpful. You suggested earlier that you may have encountered an unhelpful agent; that's certainly possible.

You most certainly should have been sent documentation about any new policies, and it is an "offense" not to do so. I'm not certain I'd tag it as a serious offense, but I think it depends on how you're defining serious. Please take note that I am not defending your former employer with this - there's no question he was wrong. But I would tag it far less serious to fail to send updated documentation of a new plan to an employee with only a month left to go on COBRA, than I would failing to send COBRA notification to an employee at all, or to fail to pay the employee wages that s/he earned, or to fire the employee for filing a wage claim (which are other issues that would be handled by the DOL). I'm not making light of what happened to you or saying you're wrong to be upset; I'm debating semantics. The DOL does not necessarily agree with me; I'm giving you my perspective.

With regards to enforcement, the DOL does have the power to require your employer to "make you whole" when a statute under their jurisdiction is violated. I don't know if, in your travels, you've seen this page.

http://www.dol.gov/ebsa/erisa_enforcement.html

Did you actually file a complaint with the DOL?

 

[COBRA2002]

Well, I consider what I had done with the DOL as effectively filing a complaint given that they did contact the employer a couple of times. Is there a formal something-or-other that you're supposed to fill out ? I mean, if that's true, it is clear they were very unhelpful as I clearly called to lodge a complaint. (I was not asking for information but for help.)

Don't worry here about how your comments might be interpretted. Not 100% caught up in this . . . Just want to find the truth as well as how best to get this resolved once and for all. All the other 'stuff' just gets in the way. That said, the relativeness of the 'offense' is -- in my opinion -- compounded by the clear lack of effort on the part of the former employer verses the effort I put into telling them what had happened, explaining the circumstances, and having to then go find facts, dates, and information myself, all for a situation they should have handled when it was first brought to their attention. A bit challenging to prove in Court, but then if I am right, all this only adds to their offense. (The core of the matter -- that they were obligatied have honored past benefits -- seems fairly settled from the various opinions gathered to date.) That said, your and other people's perspectives help me understand how to proceed a G-R-E-A-T deal.

One thing that's been confusing in preparing the legal aspects . . . Can you explain to me the relationship between ERISA and COBRA ? I get that ERISA has more to do with 'plan' and that COBRA has more to do with 'continued coverage', but there seems to be a lot of overlap. For instance, the link you provided talks about 'fiduciary responsibility' for ERISA yet implies 'notification' via the COBRA angle but seems to blur the lines between the two. Is there an important distinction ? Is ERISA an umbrella under which COBRA fits given certain circumstances ?

Thanks.

 

[cbg]

Try this:

http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.html