The continuing rise in the cost of health care is increasing the level of scrutiny and risk associated with an employer’s benefit plan. Most employers maintain some sort of responsibility for their employees’ health care coverage, but they may engage a third party administrator and/or purchase insurance to cover larger losses. Rising costs have increased the stress on these relationships.

The financial stress has shown itself in a number of different ways. For instance, insurers have a dramatically increased incentive to perform audits or deny reimbursement under “stop loss” coverage. The lack of adequate documentation or records will also tend to cause problems between employers and employees. Moreover, employees who are no longer actively working can get “lost” in the employer’s human relations system, which leads to rapidly escalating complications for a business.

In the present environment, many businesses have stop loss insurance that covers catastrophic losses, but the companies themselves are responsible for typical, medical expenses incurred by employees. In this situation, the employer’s responsibility to its employees is controlled by an employee benefit “plan.” In contrast, the insurer’s responsibility to the employer is controlled by an insurance policy. Unfortunately, the language in the plan is not always consistent with the policy issued by the insurer.

Situations arise in which an employer gets trapped between the restrictions in the insurer’s policy, the coverage provided by the plan, or a summary plan description (“SPD”) provided to employees. For example, many stop loss carriers provide reimbursement only for medical expenses incurred by employees who are actively at work. At the same time, employers may have leave policies or provide benefits to employees suffering family or medical problems. The result can be trouble obtaining reimbursement for the employee’s medical expenses.