The Broker Liability Question

David 0:01

When health plans are accused of failing to control costs or protect plan assets, could the broker who advised the plan also find themselves in the legal spotlight? We'll find out on this episode of Shift Shapers.

Announcer 0:15

Change either energizes or paralyzes. The choice is yours. This is the Shift Shapers Podcast, bringing the employee benefits industry interviews with individuals and companies who are shaping the industry's shifts. And now, here's your host, David Saltzman.

David 0:32

And to learn more about this uncomfortable but very important question, we've invited Ron Peck, Chief Legal Officer at the FIA Group. Ron is one of the most respected legal minds in health benefits space with deep expertise in ERISA, fiduciary liability, cost containment, plan governance, and the increasingly complex legal exposure surrounding employer-sponsored health plans. Welcome, Ron.

SPEAKER_03 0:55

Hi, David.

David 0:57

So let's start with the big picture. We're seeing, are we seeing a genuine increase in litigation around health plan fiduciary responsibility? Or are people just paying a whole lot of attention to a few high-profile cases? Sure.

SPEAKER_03 1:10

So I

More Spotlight On Familiar Lawsuits

SPEAKER_03 1:11

would say if I have to look at the spectrum between is it staying the same, but we're just getting more attention versus is there actually more litigation? I would lean towards the more attention to existing litigation. Nothing that we're seeing is necessarily new. It's basically a situation where you have innovative plaintiffs' attorneys who are taking ingredients that already existed and using it in a new way to accomplish different goals.

David 1:36

So what has anything changed in the legal environment? Are we seeing just more of those same kinds of suits?

SPEAKER_03 1:42

Yeah, you know, it's it's it's the same number, different targets. So if you look historically, there was a series of lawsuits. Uh, this was nearly a decade ago, when there was a major economic downturn, the 401k plans, pension plans, they all tanked. I'm sure you remember this. Everyone remembers this. And there were plaintiff's attorneys who went and they actually filed lawsuits against the financial advisors, the brokers who were in charge of those plans that tanked. And they accused them of fiduciary breach in those lawsuits. Now, this was not health plan, this was financial plan. But it's important to remember that ERISA, the Employee Retirement Income Security Act, it's not just about health benefit plans. I know those of us in the health benefits industry think the world rotates around us, right? But the truth is it covers multiple different benefit plans, including those financial plans. So you had plaintiff's attorneys who were using ERISA to file lawsuits against broker advisors, sounds similar, but for financial plans, not health plans. So the ingredient was there 10 years ago. At the same time, you had a series of lawsuits where plaintiff's attorneys would file lawsuits against third-party administrators and other entities that were not the designated fiduciary, but were still acting as a fiduciary. So those two ingredients, can I file a fiduciary lawsuit against a broker advisor? Yes. Can I file a lawsuit against someone that isn't the planned administrator, that designated fiduciary under the plan when we're talking about health benefits? Yes. Combine those two ingredients, boom, you see what we're seeing today.

David 3:25

It wasn't just 10 years ago. I mean, that was correct me if I'm wrong, but that was the genesis of ERISA. It was a bunch of failures and some fooling around with retirement plans. Absolutely so.

SPEAKER_03 3:36

It's interesting because I think if if we step back and we look at this concept of fiduciary and fiduciary duty at a macro level. And it's funny, you hear now radio commercials for financial advisors, and they say, you can trust us. We'll make you lots of money because we're a fiduciary. Most people hear that commercial. They don't even know what fiduciary means, right? I could be pulling any kind of Latin term out of my you know what, and you wouldn't know what it means, but it sounds sophisticated, so you trust it. The thing about a fiduciary is that ERISA requires a plan to designate at least one plan administrator who functions as the fiduciary of the plan. But just because you're required to designate one doesn't mean that others cannot also be serving as a fiduciary intentionally or otherwise. I like to tell people it's very similar to the uh NFL. I'm very excited about the forthcoming uh football season. You know, I love it. You could have a team, you're required to have at least one quarterback. Somebody's got to throw the ball. But that doesn't mean you don't have backups on the bench. It's the same here. You need to have at least one fiduciary, but depending on what other entities are doing, if they are managing the plan's assets, are they making decisions that will dictate what the plan does or doesn't do, if they have any kind of control, exercise any sort of discretion over the plan or its activities in part or whole, they may be designated to be a fiduciary. So it broadens the number of fiduciaries that are potential targets for lawsuits regarding fiduciary breach. So take that, set it aside. You have all these entities that may be fiduciaries, whether they know it or not. Now, as you mentioned, these lawsuits have existed as long as fiduciary duty has existed. Absolutely so. Where I think we saw the catalyst, and I mentioned about a decade ago, is when somebody got the bright idea: hey, you know, if I'm not happy with the way things are going, can I sue my advisor? And, you know, recently we saw tweets online, you know, people like uh Mark Cuban and these celebrities, they're tweeting about the law firm uh Schlichter and Bogard. They're a name that's well known to us. They sort of with the uh tip of the spear when it came to those lawsuits against uh fiduciary advisors back when we were talking about our financial plans. They now are taking that recipe that they perfected then and applying it now today to brokers for uh health benefits.

David 6:03

Weren't they also one of the firms that was key in the tobacco litigation? They were.

SPEAKER_03 6:08

And so it it it it's clear that they have experience. And it's sort of that rinse and repeat, right? They they know what works. And then they say, can I use this for something else? You know, it's it's no different than I purchase cookie cutters and I make these cookies for my three-year-old, right? And he loves it and he gobbles it up. One, because it's a cookie and who's not gonna eat the cookie, am I right? But number two, he loves the superheroes, the shapes that I've I've created. You know, who doesn't want a Spider-Man cookie? But then when I'm trying to get him to eat pancakes for breakfast, like, oh, how am I gonna get cookie cutter? Now we've got a Spider-Man-shaped pancake. I want him to eat his vegetables, right? Mash it up, bam. Now it's the shape of spider. And so you what they've done is they've perfected the cookie cutter shape, and they're just determining different fields where they can apply it.

David 6:58

So

Fiduciary Status Comes From Control

David 6:59

let's talk about. I mean, for a long time, brokers just assumed that litigation risk sat with the employer or the plan fiduciaries or the TPA. What's changed that puts advisors into this discussion? Anything, or is it just the ability for lawyers to add more folks to the mix and see what comes out the other end?

SPEAKER_03 7:18

Yeah, you know, I I think that it it's the latter. I do, David. I think you're you're spot on. Litigation is as old as the world itself, right? Uh and it's interesting because I like to tell people that litigation, particularly fiduciary litigation, is very similar to COVID. Just because I may be positive for COVID doesn't mean that you can't join the party, right? And so the attitude that, well, I thought the plan administrator is sort of that corporate curtain, right? That protects me. They're the steel curtain and you can't get past them to get to me, not true, number one. And and and and courts have been deciding that for as long as these plans have existed. All right. Just look it up, right? There's cases like the Tiara Yacht's case, right? Uh, there's the uh Heinz case. There's all these cases where third-party administrators are being sued by the employer, by employees. And so these are examples where that that that that veil was pierced. Number one. Number two, it doesn't matter about the contract. I know a lot of third-party administrators, broker advisors, vendors, right? Let's talk about vendors. Anyone who's providing any kind of service to a plan, they put a provision in their contract that says, I'm not a fiduciary, I'm not functioning as a fiduciary. That provision is not worth the paper it's written on if you don't actually prevent yourself from acting like a fiduciary. The moment you make any kind of decision how the plan assets are going to be used, how the claims are going to be processed, any of those decisions dictating how the plan is actually managed, the moment you do that, you've become a fiduciary, regardless of what your contract says. We have those things called like fraud and the and and I just lost the phrase.

David 9:04

Fraud and the inducement. So we have these things like fraud and the inducement. And that leads to the next question: can a broker create exposure simply by being seen as a trusted strategic advisor? I know NABIP right now has a course that they're marketing to help agents and advisors become more aware of ERISA and these responsibilities under ERISA. If I were to take that course, put that little thing on my business card, would that expose me more?

SPEAKER_03 9:32

So, excellent question. I believe, and again, this is just based on what I've seen thus far, that the key term you used was seen as a fiduciary. There is very little to nothing you can do to prevent yourself from being seen as a potential target for litigation. Anyone can sue anyone for anything. The real question is whether they can successfully achieve litigation against you once they've targeted you. Being uh an educated advisor as it relates to things like ERISA, applicable regulations, statutes, uh best practices, all of the things that you're talking about makes you a better advisor. It does not make you a fiduciary. Ultimately, what will make you a fiduciary is if your client gives up control and allows you to make the decisions for them. Being able to provide your client with enough information to make an educated decision, but ensuring that they still maintain that ultimate discretionary control over the plan, that's the crux of the issue. And if you're targeted in a lawsuit by a plaintiff's attorney and you can demonstrate not only on paper, are you not a fiduciary, but in function, you're not the ultimate decision maker? That's the shield. That's what protects you.

Documentation That Keeps You Safe

David 10:57

How do you, as an advisor, protect yourself against that? Do you insist that you get a copy of the client's records that they're keeping for ERISA from the meeting? Do you send a follow-up letter or a follow-up email saying we're pleased to provide you with three different options? Your committee or you or whatever chose XYZ. How do you protect yourself?

SPEAKER_03 11:18

Yeah, I I love that concept of record keeping and communication because unfortunately, a lot of entities that have been accused of fiduciary breach, when challenging that concept that they're a fiduciary in the first place, the first thing they're going to want to bring up is all the things we've already talked about, right? They claim that all these defenses were in place, that they don't make the ultimate decision, that they don't have any control over the plan's assets, that the plan administrator maintains all discretionary control. Well, the plaintiff's attorney brings up the employer, right? The CFO, the CEO, whoever it is that's the ultimate contact, and they say, Have you ever made any decisions as it relates to the plan? And they say, No, right? My broker makes all the decisions. That's going to sink you right there. And honestly, for a lot of these broker advisors, that's the first time they've ever asked, are you making any decisions or not? That's the first time that the question's ever been asked is on the stand. Don't let that happen. So it's a matter of A, repeating, I'm not a fiduciary, I can provide you with advice, but ultimately you need to make the decision. Two, documenting that role and response. Three, reiterating. You mentioned, do you get the records from the meeting? Make the record yourself. Don't trust the employer to know these things and provide you with that information. It's important for you to enforce those roles and ensure that it's recorded properly.

David 12:33

One

Subrogation And Plan Money Left Behind

David 12:34

of the places where, as this goes along, there will likely be more of these. One of the places where it gets really, really expensive is in cost recovery. It's an area that most brokers don't know anything about. Can you explain, for folks who may not know what it is, what subrogation is and whether or not brokers ought to be paying attention to recoveries or involved in the process?

SPEAKER_03 12:56

Boy, David, you're opening a big can of worms. And the thing is for many, they may think, well, you know, is this a sudden shift to a different topic? And I would tell you it's not, and it's all related. Because if we step back and we say, okay, listen, somebody is potentially at risk for being sued based on a a theory of fiduciary breach, whether it's the employer, the plan administrator, the third-party administrator, the broker advisor, or all of the above. Ultimately, the complaint when it comes to fiduciary breach, if you boil it down, it's really only going to have to do with one of a few things, right? Number one, you're not administering the plan in accordance with its terms. Simple example, plan document says we don't pay for cosmetic surgery. The CEO's wife wants to get a nose job, the surgeon submits the claims to the plan, and you pay the claims with the plan's money. You didn't apply the exclusion from the plan document. That's a breach of fiduciary duty right there, right? So applying the plan as it's written. Now file that away. Hold on to that for a second. Number two, another thing you may do is yeah, I'm administering the plan in accordance with its terms, but I'm doing very flippantly, right? I don't investigate the claims data. I don't monitor anything. I'm not checking for opportunities to contain costs, right? I'm wasting the plan's money. That's called prudent management of plan assets. So number one, administering the plan in accordance with its terms. Number two, prudent management of the plan's assets. What does this all relate to? A fiduciary has a duty to put the plan's interests first and foremost over all other things, okay? Including self-dealing. All right. So then number three, and this, by the way, a lot of the Schlichter and Bogart lawsuits we were talking about relate to this number three, self-dealing, a lack of transparency when it comes to fees, overpaying fees, paying excessive costs, self-dealing. Take those three things. If you cover those three, you're fine. Okay. So when we talk about things like subrogation, what is subrogation? Subrogation, simply put, is a claim comes into the plan, it looks to be a covered expense, they pay the claim. Find out later that some other payer, workers' compensation, auto insurance, another health plan, whatever it is, is primarily responsible for those claims that your plan paid. So what do you do? You go to that other payer and you say, hey, listen, I paid a claim that you were supposed to pay. Can you reimburse me? And if they say, well, we would, but we've already cut a check to the plan member. You go to the plan member and you say, hey, that other carrier cut you a check, but the money's actually mine. Pass it along to me. That's subrogation in a nutshell. Now, if you think about it commonsensically, that makes a lot of sense. The plan shouldn't be responsible for something that they're not responsible for. And you, if you're a plan member, you've had your claims reimbursed by the health plan, and then the same claim is reimbursed by another party. That's double dipping, right? That's a windfall. The law doesn't protect that. Now, tie that to fiduciary duty. And this is just one example. There are many examples throughout the plan where there's a function of the plan, something the plan is supposed to be doing. Subrogation is one of them. There are plan provisions in the plan document that says if this happens, if we pay claims and there is a liable third party, we have a right to get that money back and we will get that money back. If the plan is not enforcing its subrogation rights, remember the first thing I told you? Enforcement of the plan terms? You're not enforcing the plan in accordance with its terms. Oh, number two, I said prudent management of plan assets. If the Geico Gecko or the progressive caveman or whatever other mascot you want to bring up has got your money and it's right there on the table, and all you gotta do is ask for it, and you're either too lazy or too ignorant to do so, you're leaving the plan's money on the table. You're wasting the plan's money. That's imprudent management of plan assets. Number three, if the argument is it's gonna cost too much, it might cut into my bottom line, I don't want to look bad. You have a lot of entities out there that could be subcontracting subrogation to someone who's really good at it, but they worry if somebody goes and increases recoveries by 700%, is my client gonna ask, why didn't you do this sooner? That's gonna make me look bad. So I'm just gonna pretend it doesn't exist. That sounds like self-dealing. That sounds like a conflict of interest. You've literally checked all three boxes I mentioned before. So, David, spot on for bringing this up. I'm not saying anyone has necessarily breached their fiduciary duty by not investigating and implementing better subrogation products or provisions right now. But I am saying if you're aware that this opportunity exists and you still choose to ignore it, you are potentially creating risk or at least fertile grounds for a complaint.

David 17:42

Well, and it's something that not an awful lot of advisors, you know, I had the fortune or misfortune to run a TPA for nine, eight, or nine years. So it was part of my daily vocabulary. But a lot of advisors aren't even aware that this thing called subrogation exists. So it's a great place to have that conversation. Is there an easy way for advisors to keep themselves out of a liability situation when it comes to subrogation?

SPEAKER_03 18:07

Yeah, you know, I would tell you that the easiest thing to do as far as subrogation, it's it's really the easiest thing to do for any provision in the plan. I would tell you, step one, start at the cover page, go through the plan document, finish at the last page. All right. And and honestly, some plan documents are longer than others, so I'm sorry for doing this to you. But if you've got a free moment, and I know none of us do, um, maybe they have plan document books on tape. You could listen in the car. I don't know. I'll narrate it. Who doesn't want to hear me rattle off definitions and exclusions, right? Um, but what I would tell you is go through each provision, go through each section and ask, is this something that the plan says it'll do? And if so, who's doing it? That's the first question to ask. So when you get to a provision like subrogation and it says, if a third party is responsible, we will demand reimbursement, we will do this, we will do that, ask, who's we? Who's we? Right? Confirm who it is. Is it the employer? Highly unlikely. Is it the third party administrator? Ask. Is there an expectation that the broker is going to do it? Maybe. Confirm. And if no one really wants to do it, you better find somebody who can. Go ahead, hop on the internet, and Google, hey, who can do subrogation for my plan? And there's plenty of opportunities that pop up. There's really no excuse. Every third-party administrator, every carrier, every ASO, really every stop loss carrier at this point in the industry knows of at least one or two subrogation entities or service providers that they like to work with who will do a good job for you. Obviously, you know, self-promotion, the fiat group, we do subrogation, but I'm not here to advertise or market that. If you tell me someone is not performing subrogation and I can convince them to perform subrogation, but with someone other than the field group, I prefer that over not doing it at all. Because that's one way to help the self-funded industry and help your people. And frankly, that's the priority for me.

Vendor Picks Without Owning Decisions

David 20:03

One of the concerns that I know a lot of advisors have is that they're being asked to make recommendations for TPAs or point solutions. Should they vet those entities differently if they know that they're they might have some liability or create some liability? For example, the PBM example is the is the low-hanging fruit. If there are two different PBMs who are vying for a group's account and they have different models of reimbursement and payment, and one is what they call a transparent, now TPA or PBM rather, and the other isn't, is it the responsibility of the advisor to make sure that those differences are known?

SPEAKER_03 20:41

Yeah, that's an excellent question. In particular, your emphasis on PBMs, because if you look at the health benefits industry, right now there's really two hot topics that everybody's eyes are on, right? One is PBMs and two is out of network claims, right? Things like the No Surprises Act, bounce billing, all coming from that out-of-network field. So whether we're talking about PBMs or out-of-network, you have to assume somebody's going to be asking, what do we do with that? Right? Wha what's our approach? And ultimately, I would say the solution for a broker advisor, TPA, really anybody. This is, this is this is information. This is advice you could just take home and use in your daily life. When it comes to being a fiduciary, ultimately it's about power, control, discretion. So, David, if I tell you, hey, we're going to use this PBM, they're the ones I suggest you work with, they're the ones that I promote. And you say, okay, you say it, I do it. Whether I intend it or not, I come off like a fiduciary because your decision to work with that vendor, with that PBM, to handle out of network claims the way I suggest, whatever it is, is based on one thing the fact that I told you to do so. So that puts the power in my hands. A simple solution. Prefer that, and it's quite simple when you think about it, is to provide the rationale, provide the reasons why that's your choice. I prefer this PBM for the following reasons. Boom, boom, boom, and list them out. Because what you're doing now is your audience is not going to select that PBM because you told them to do so. They're selecting the PBM because they agree with the rationale. They agree with the reasons that you selected that PBM, that you selected that vendor. And this is something that applies universally. I mentioned before that the fiat group does subrogation. Well, there are instances where the plan paid $100,000. They're entitled to reimbursement of $100,000. But for a number of reasons, we believe in our professional best practices, common sense, that going after the full $100,000 will cost you more than it's worth. And let's say there's $75,000 on the table. We believe that that $75,000 is the best you're going to get. You'll end up spending more than $25,000 to get the $100. So this $75,000 juice worth the squeeze, this is the best option. If I go and I tell my client, take the $75,000, just trust me. I, as a fiduciary, right? I'm a fiduciary. I'm performing subrogation. I'm a fiduciary now of the plan, insofar as it relates to the subrogation rights. But if I tell them, I think you should take the 75, and here's why, what do you think? I'm giving them the opportunity, the information to make their own decision based on the same factors that I use to make the decision. It's not blind reliance on me. It's a decision made by them.

David 23:39

Lest someone think the situation is esoteric, I can tell you that it only happens on days that end in why, where you know, there's only so much available and it will end up costing you more. I mean, I can't count on both hands the number of times in running the TPA we had those conversations. It just wasn't worth going after it. It was way more expensive. And so you take what's in the best interest of the plan, but you document the hell out of it. So the follow-up question, I guess, is should brokers be reviewing performance reports regularly after they make a recommendation that's been taken by the plan?

SPEAKER_03 24:13

Absolutely. But you know, the question becomes is it because of a fear that they're breaching some sort of fiduciary duty? May or may not. Honestly, they should be doing it just because that's how you stay relevant. I think that for a lot of broker advisors that I've spoken to, the concern is if I pull back the curtain and I reveal all the factors that I use in making my decisions, providing my guidance, giving my advice, right? If I go and I do that, then what's going to happen is I start to make myself irrelevant, right? It's am I a middleman? If I say, hey, here's all the resources I use, here's all the things I use to make my decisions, here's all the factors I use to make my determinations, I do it again and again and again. I'm educating my client to kind of do it themselves, right? If the handyman comes and he's working on your house and he's showing you how he does everything, eventually you're, you know what? I could just go to Home Depot, get the supplies, and do it myself. Nobody wants that. So, how do you stay relevant in a world where there's this expanded sense of transparency and you're outlining everything? It's by being an active advocate for your client. It's by reviewing those performance metrics. It's by ensuring that they're staying ahead of new rules and regulations. It's ensuring that they're working with the best parties at every opportunity. So it's not a matter of just trust me. It's a matter of you do trust me.

David 25:32

So

Oversimplifying Advice Creates Exposure

David 25:33

what are brokers doing today that increases their risk without them realizing it? Are they putting themselves in at risk for certain behaviors that we haven't already discussed?

SPEAKER_03 25:44

Yeah, gosh. You know, it it's unfortunate because it's sort of a catch-22. I think that most broker advisors, and and rightfully so, and I empathize, I totally get it. Everybody wants to make things as simple as possible for the client, right? Because we're talking about various types of employers, groups, entities that some are more sophisticated than others, right? We all know this. But generally speaking, the reason they hire us is because they don't want to have to worry about it. They don't want to have to think about it. They want to pass it off on to somebody else, right? They've got enough to worry about when it comes to running their own business that they don't want to also have to worry about running the plan, right? If I'm in the business of, I don't know, producing athletic sneakers or golf clubs or, you know, I have a chain of burger franchises, you know, I've got enough to worry about in my industry that I don't have to start memorizing ERISA, right? And so I'm hiring you to do that work for me, to compartmentalize, to summarize, and to simplify. And so we feel, well, that's our that's our job, is to simplify. But the worry is that if you oversimplify and it's basically look, you don't even have to think about it, just trust me, let me do it for you. Now you're starting to stray into that realm of fiduciary status. Now, the thing is, if your feeling is that there is no possible way that you can get the ear of your client long enough to provide them with all the different factors and resources that you use to make your decisions. And it's like, listen, Ron, everything you're saying makes sense, but it's not realistic. I can't do that. Well, you know what? Maybe be a fiduciary. The thing is, so many people, so many entities are so afraid of that term fiduciary and of being a fiduciary that nobody has stopped to think and ask, is it really something to be so afraid of? Because if you look at what the responsibilities of a fiduciary is or are, most of those things are things you should probably be doing anyway. Transparency, honestly, a lack of self-dealing, putting the client's interests first. If a client walks in and says, Are you going to be honest with me transparent and put my interests first? And you say, No way, I'm not a fiduciary, they're probably going to walk out. And not because you're not a fiduciary, it's because you're going to be dishonest. So the thing is, also ask yourself, at what point is it worth avoiding fiduciary duty in the first place?

Plan Exceptions And Stop Loss Consequences

David 28:05

So let's go back to that point that you mentioned earlier about the CEO or the CEO's spouse deciding that they want a nose job. That's not covered under the plan, but the CEO says to the plan, pay for it anyway. And I'm the broker, I'm sitting there, I don't even know this has happened. Four months later, somebody else decides they want a nose job. And the plan says, no, we don't pay for that. Now, do I have liability be even though I wasn't aware of the predicate? Because as we all know, you know, when you make an exception to the plan for somebody, you set a precedent.

SPEAKER_03 28:40

Yeah, dude. And that's the key term. And I think you know the answer before you ask that question because you're absolutely correct. There, there, as a broker advisor, and this kind of goes towards the fact that maybe you're not a fiduciary is when that plan administrator, when that employer, when that group goes and makes these decisions without your feedback. You know, that that's more proof towards the fact that you don't have control. You're not exercising authority over this plan, is the fact that they can go and make these decisions behind your back, right? Number one. So setting aside fiduciary for a moment, the number of risks and the reason why you need to proactively educate your client and say, listen, don't go and make those judgment calls because here's all the multifaceted reasons why it's a bad idea. And right, number one, precedent. Like you mentioned, every single plan member is supposed to be treated the same, every plan participant. So if you're gonna cover it for one, you have to cover it for all. That's number one, because otherwise, they're gonna file a lawsuit against you for discrimination. Don't want to have that. Number one. Number two, if you pay a claim that exceeds or or is not covered by, is not eligible under the plan, not only are you breaching your fiduciary duty by mismanaging the plan and wasting the plan's assets, but you're also exposing yourself to other financial risk. Because what happens is if that claim hits or exceeds your specific deductible with stop loss, stop loss is gonna enforce the plan as written. They're gonna do a better job of running the plan than you did, and they're gonna deny the claim for reimbursement. That's number one. Number two, God forbid, let's say something goes wrong with the surgery and there's an infection and we're dealing with sepsis. Now the claims are in the hundreds of thousands. Claims that arise from, even though those claims in and of themselves would be eligible, infection claims are certainly covered by the plan. If they were caused by an excluded procedure, they are also excluded. It's sort of that fruit of the poisonous tree type concept. So stop loss is not gonna reimburse those either. So again, what is the point in using plan assets to pay a one-off like that? If you as an employer are thinking we want to cover the the CEO's wife's nose job, she goes to lots of company events, wanting to look her best. We want the CEO to be happy, so so we're gonna pay it. You know what? Use company assets, right? Go start a GoFundMe page. I don't know. Just don't use the plan's money, right? Because the whole point of using the plan's assets is to ensure that it's covered, to access discounts, to enjoy protections that are afforded by the plan, to have access to things like stop loss. And if it's a situation where none of those apply, right? You don't want to pay it in the future for other people. You know stop loss is going to exclude it. You're not getting a network discount from a cosmetic surgeon, right? What's the point of using plan assets in the first place? I think that is more of just a knee-jerk reaction that if it's medical, use the health plan, which we could have a whole nother conversation about that. It's amazing. Somebody gets into a fender bender, the last thing they want to do is submit it to auto insurance. But in our nation, you get a paper cut and it's like, hey, will insurance cover it. Absolutely. Absolutely.

David 31:42

And you go to the ER for it too. That's right. So as we got a couple minutes left. What is

Next Wave No Surprises Act Errors

David 31:48

what's the next litigation blind spot for brokers? What, what, what do you think is coming?

SPEAKER_03 31:53

Yeah. So that's a great question. And, you know, I it's amazing because I would say, and we did cover this in part today. So thank you very much, David. I would say maybe like 15 years ago, 20 years ago, I mentioned to uh Adam, our CEO, I said, hey, listen, do you feel that plans maybe have a fiduciary duty to work with us, right? To ensure that their subrogation is the best possible process that they could have, right? If they're aware that this money's on the table and they don't go and take it, are they breaching a fiduciary duty? And he laughed. He was like, listen, I get what you're saying. You want to go and advertise, you have a fiduciary duty to work with the FIA group. I mean, talk about a windfall, right? They'll be lining up at the door. Absolutely. But one, you know, that wasn't necessarily, there was no precedent. There was no legal evidence that that's absolutely the case. It was just an idea, it was a thought, it was a concept. It was kind of funny. Number one. And number two, it's a little heavy-handed, right? To say, oh, you better watch out, you know, someone's gonna sue you. Because at the time, 20 years ago, that's what it was. To your question, 20 years later, it's still not certain, but it's starting to look more realistic. I would say if there's any opportunity to improve plan for performance, whether you're talking about fraud, waste, and abuse, overpayments, exclusions, how you process and pay out-of-network claims, subrogation, I think that that's all fertile ground. In fact, you know, one thing that that's a hot topic, and I mentioned it before in addition to PBMs, are our No Surprises Act and the out-of-network claims. And insofar as that's related, we're already starting to see rumblings regarding lawsuits being filed against carriers and TPAs for the following reason. A claim is denied, or less than 100% is paid. The provider submits a claim under the No Surprises Act. They're basically saying the law prevents me from balance billing the patient for the difference. In accordance with the law, the No Surprises Act, I'm going to initiate the NSA process with this payer. And there's initially a negotiation. And then when negotiation fails, it goes to arbitration, the IDR process. You know, the two sides make their demand, the arbitrator goes and makes a decision. And based on statistics, more often than not, sides with the provider. Now the NSA, this federal law says you, the payer, must pay the amount that the arbitrator has decided. And they go and they pay this claim and they say, gosh darn it, we lost that one in IDR under the NSA. Well, somebody performs an audit and they look back and they realize that that claim that had been denied or underpaid, it was not an emergency claim. It was not an air ambulance claim. And it was not an out-of-network specialist at an in-network facility. Well, David, those are the only three types of claims that can be challenged under the NSA. All other denials, all other exclusions for all other types of claims that don't fall into one of those three categories, those need to be appealed, traditional appeal, the same way denials have been appealed for decades, in accordance with the terms of the plan document and ERISA, if it applies. So you basically now have a plan that paid a claim under the NSA when the NSA didn't apply in the first place. What that is, is a failure to triage these disputes when they first come in.

David 35:15

And that's something that we've got to keep an eye on. And I'm sure there will be more. But this is this is exactly the kind of conversation that brokers need to hear because, as you know and I know, legal risk has a way of becoming very real very quickly. Ron Peck, Chief Legal Officer at the FIA Group. Ron, thanks for a fascinating discussion.

SPEAKER_03 35:34

Thank you.

Announcer 35:35

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