This controversy arises from Plaintiff Express Oil’s attempt to create a self-funded health benefits plan for its employees while eliminating any uninsured risk for itself by procuring stop-loss insurance. Express Oil employed and relied on Defendants ANB Insurance and Alan Wood to help it transition from a fully-insured to a self-funded health plan, design a suitable self-funded plan, and procure appropriate stop-loss insurance.
Express Oil purchased a self-funded plan from Defendant Blue Cross, and Blue Cross administered the plan, which became effective in 2003. Express Oil allegedly believed that the self-funded plan had a $1 million dollar comprehensive lifetime maximum for each covered member and thus procured stop-loss insurance covering any member’s claims that exceeded $75,000 up to the $1,000,000 dollar comprehensive lifetime maximum.
The genesis of this specific dispute is the birth of twins by one of Express Oil’s employees. One of the twins was born with very serious medical issues and quickly amassed costly medical bills under Express Oil’s self-funded plan. During the early years of the child’s life, Express Oil paid over $2.8 million dollars in claims on the child. During the 2007–2008 policy year, Express Oil exhausted its $1,000,000 lifetime maximum stop-loss reimbursement benefits. Under the self-funded plan’s definition of “lifetime maximum,” however, many of the claims incurred by the child were not subject to the self-funded plan’s lifetime maximum, and Express Oil remained liable for the claims that exceeded the $1 million ceiling of the stop-loss insurance policy. Express Oil was exposed to this liability as a result of the misinterpretation of the self-funded plan’s definition of “lifetime maximum” and its subsequent procurement of stop- loss insurance that did not fully cover it from the liabilities from which it had intended to protect itself. In the instant lawsuit, Express Oil seeks to hold at least one of the Defendants liable for this costly gap in coverage.
BCBS plan administers prevailed based on:
The court did allow the employer’s fiduciary breach claims against the broker and agent to proceed to trial.
It is important to make certain that stop-loss coverage adequately covers the self-insured health plan’s terms. One approach is to propose catastrophic examples of varying dollar amounts to the broker or stop-loss source and request that calculated recovery amounts are demonstrated.
MyHealthGuide Source: Express Oil Change, LLC v. ANB Ins. Serv., Inc., 2013 WL 1245748 (N.D. Ala. 2013), Court’s Opinion