On September 12, 2023, the Congressional Research Service issued report LSB11040 describing the Braidwood case and suggesting a possible action that Congress could take to address the issues raised by it.

This case was the subject of an article in the October 11, 2022, edition of Compliance Corner. On September 7, 2022, the US District Court for the Northern District of Texas issued a ruling in Braidwood Management Inc. v. Becerra, in which the court ruled that certain ACA preventive care mandates violated the Constitution as well as the Religious Freedom Restoration Act (RFRA). In particular, the court determined that the ACA preventive-care mandates violate the Constitution's Appointments Clause because the appointment process for members of the US Preventive Services Task Force (PSTF), the body that reviewed preventive services in order to determine whether they are subject to the ACA mandate, did not satisfy the constitutional method for appointing officers of the United States. The court agreed with the plaintiffs in the case that the actions of the PSTF, whose decisions bind those subject to the ACA mandate (such as insurers and employers in self-insured plans), are actions that must be done by persons appointed using the process under the Constitution (or actions that must be ratified by someone who was so appointed). Since the members of the PSTF are not appropriately appointed and their actions are not ratified by someone so appointed, their involvement in the ACA preventive care mandate was unconstitutional.

Noting this and other issues in the case, the report suggests that Congress could amend the preventive services requirement to indicate further that all preventive services, or at least those recommended by PSTF, must be approved by the HHS secretary or another official that has been nominated by the president and confirmed by the Senate.

The report does not directly affect the administration of either fully insured or self-insured plans. However, it serves as a reminder that the issues concerning the ACA preventive care mandate are still controversial, so employers should keep an eye on developments.

Congressional Research Service Report LSB11040 »

On September 20, 2023, HHS, DOL, and IRS (the departments) issued proposed rules outlining the fees established in the No Surprises Act for the Federal Independent Dispute Resolution (IDR) process.

These proposed rules would amend existing regulations to provide that the administrative fee amount charged by the departments to participate in the Federal IDR process and the ranges for certified IDR entity fees for single and batched determination will be established by the departments in notice and comment rulemaking, rather than in guidance published annually.

The issuance of the proposed rules follows a Texas district court decision issued on August 3, 2023, which vacated a portion of the departments’ December 2022 guidance that significantly increased the IDR administrative fees and imposed restrictions on batching-related claims in a single payment dispute. In this case, the judge agreed with the Texas Medical Association and other healthcare providers that the issuance of the rule violated the Administrative Procedures Act’s notice-and-comment requirement. This case was covered in the August 15, 2023, edition of Compliance Corner in an article regarding department-issued FAQs that address the impact of the court’s ruling on IDR fees.

The proposed rules would increase the current administrative fee from $50 to $150 per party per dispute, which would remain in effect until changed by subsequent rulemaking for disputes initiated on or after the later of the effective date of final rules or January 1, 2024. The departments also proposed certified IDR entity fees ranging from $200 to $840 for single determinations and $268 to $1,173 for batched determinations. Certified IDR entities will continue to be permitted to set their fees within the ranges proposed in the proposed rules — if finalized.

Public comments on the proposed regulations are due within 30 days after the proposed regulations are published in the Federal Register.

Employers with self-insured plans that are involved in payment disputes with out-of-network providers should be aware of this development and consult with their TPA or legal counsel if questions arise.

Federal IDR Process Administrative Fee and Certified IDR Entity Fee Ranges Proposed Rule »

No Surprises Act Overview of Rules and Fact Sheets »

On September 12, 2023, in Rose v. PSA Airlines, Inc., the Fourth Circuit Court of Appeals (Fourth Circuit) reviewed the district court’s dismissal of ERISA claims brought by Jody Rose, the mother and administratrix of the estate of a group health plan beneficiary. Specifically, the Fourth Circuit considered whether the estate could seek monetary relief under the specific claims raised.

The case involved twenty-seven-year-old flight attendant Kyree Devon Holman, who worked for PSA Airlines, Inc. (PSA) and was a covered participant under PSA’s self-insured group health plan. Holman had been diagnosed with myocarditis in 2018 and his doctors determined a heart transplant was necessary for his survival. However, his doctors’ requests for approval for heart transplant surgery were denied twice by the plan, first on the basis that the surgery was experimental and then on the grounds that Holman did not meet certain alcohol-abuse criteria, although no such criteria was specified in the plan terms.

After unsuccessfully appealing the denial, Holman’s doctors sought an external review of the claim on an expedited basis, which under federal law requires a decision within no more than seventy-two hours. However, the external review organization, MCMC, treated the claim as standard, which requires a decision within 45 days. Although MCMC eventually overturned the previous claim denials, it was too late; Holman passed away five days after the expedited decision should have been made.

Rose then sued the plan, the named plan administrator, PSA, plan service providers UMR and Quantum, and MCMC (collectively, the defendants), seeking relief for a wrongful denial of benefits under ERISA § 502(a)(1)(B) or, alternatively, for a breach of fiduciary duty under ERISA § 502(a)(3). Rose sought, among other forms of relief, the monetary cost of Holman’s surgery that was wrongfully denied. However, the district court granted the defendants’ motion to dismiss both claims and held that the monetary relief sought was not available under either ERISA provision.

On appeal, the Fourth Circuit affirmed the district court’s dismissal of the denial of benefits claim, explaining that ERISA § 502(a)(1)(B) only permits a plaintiff to recover benefits due “under the terms of the plan” (i.e., seek reimbursement of out-of-pocket expenses) or enforce rights under the terms of the plan (i.e., seek an injunction). This provision does not allow a plaintiff to seek the monetary cost of a benefit never provided.

The Fourth Circuit then focused on Rose’s claims under ERISA § 502(a)(3), which allows a plan beneficiary to seek an injunction or “other appropriate equitable relief” to enforce the terms of ERISA or the plan or redress a violation of those terms. The key question before the Fourth Circuit was whether the monetary cost of Holman’s wrongfully denied surgery qualified as “equitable relief.” The Fourth Circuit observed that monetary damages for compensatory purposes are considered a form of legal relief not available under ERISA § 502(a)(3). However, based on US Supreme Court precedent, monetary restitution for unjust enrichment can be considered a form of equitable relief under ERISA if certain requirements are met. Specifically, to support a claim to recover money under § 502(a)(3), a plaintiff must point to the specific funds they rightfully own that are possessed by the defendant (i.e., courts cannot award relief from the defendant’s general assets to make the plaintiff whole).

The case was remanded back to the district court to make the determination as to whether Rose’s § 502(a)(3) claim sufficiently alleged that the defendants were unjustly enriched by interfering with Holman’s rights and that the fruits of that unjust enrichment remain in their possession or can be traced to other assets.

Although at an early stage, the case provides several important takeaways for employer plan administrators. First, it underscores the importance of ensuring that group health plan claim reviews and appeals are conducted in accordance with ERISA and the plan terms and that external claim reviews are completed within the federally required timeframes. Additionally, it serves as a reminder that equitable relief under ERISA can potentially encompass monetary relief for plaintiffs, provided specific requirements are satisfied.

Rose v. PSA Airlines, Inc. »

On September 19, 2023, the DOL, HHS, and IRS (the departments) extended the comment period for the MHPAEA Proposed Rules and Technical Release announced on July 25, 2023. Please see our summaries of the Proposed Rules and Technical Releasein the August 1, 2023, Compliance Corner edition.

The departments report considerable interest and requests for additional time to review the documents and submit comments. In response, the departments extended the comment period by 15 days to October 17, 2023, noting they value public feedback as they consider whether and how to issue final rules and future guidance. Written comments may be submitted electronically or by mail and will be made available to the public.

Departments’ Notice of Comment Period Extension »

On September 13, 2023, the IRS released Revenue Procedure (Rev. Proc.) 2023-31, which provides guidance on exceptions from electronic filing requirements for certain filers of Forms 8955-SSA and 5500-EZ. Rev. Proc. 2023-31 applies to filings submitted with respect to plan years beginning on or after January 1, 2024.

Rev. Proc. 2023-31 supersedes Rev. Proc. 2015-47 and updates the procedures related to hardship waivers for Forms 8955-SSA ( Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits ) and 5500-EZ ( Annual Return of a One Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan ). This prior guidance outlined procedures a plan or plan administrator could follow to request a hardship waiver of the requirement to file these forms electronically.

This updated guidance informs plans that the procedures for seeking either an undue hardship waiver of, or administrative exemption from, the electronic filing requirements for Form 8955-SSA, or an undue economic hardship waiver of the electronic filing requirements for Form 5500-EZ, will generally be available in the respective form’s instructions, or “in applicable IRS publications, forms, or other guidance, including postings to the IRS.gov website.”

Employers that may need to file either a Form 8955-SSA or Form 5500-EZ should review this guidance and follow the prescribed procedures for requesting hardship waivers in future plan years.

IRS Rev. Proc. 2023-31 »

To improve transparency in the group health plan context, the Consolidated Appropriations Act, 2021 (CAA, 2021) amended ERISA to require the removal of gag clauses in service provider contracts. In addition, employers annually must formally attest to satisfying this requirement, with the first attestation due by the end of 2023.

Specifically, under the CAA, 2021 gag clause prohibition, group health plans and insurers are prohibited from entering into agreements with a healthcare provider, provider network, TPA, or other service provider offering access to a provider network that include:

1. Restrictions on the disclosure of provider-specific cost or quality of care information or data to the plan sponsor, participants, beneficiaries, or enrollees (or those eligible to become participants, beneficiaries, or enrollees of the plan or coverage).
2. Restrictions on electronic access to de-identified claims and encounter information for each participant, beneficiary, or enrollee upon request and consistent with HIPAA, GINA, and ADA privacy regulations.
3. Restrictions on sharing information or data described in (1) and (2) or directing that such information or data be shared with a business associate, consistent with applicable privacy regulations.

Group health plans subject to the prohibition and attestation requirements include, but are not limited to, major medical plans, prescription drug plans, and pharmacy benefit plans. Point solution programs that are group health plans are subject to the requirements unless an exception applies. There are no exceptions for non-federal governmental plans (such as plans sponsored by state and local governments), church plans, or grandfathered or grandmothered plans.

However, the gag clause prohibition and attestation requirements do not apply to short-term limited duration insurance and ACA-excepted benefits, such as limited-scope dental and vision plans, long-term care plans, certain hospital or other fixed indemnity insurance, specific disease or illness insurance, and accident, disability, and workers’ compensation benefits. Additionally, the departments are not enforcing the requirements with respect to health reimbursement arrangements (HRAs) or health flexible spending accounts (Health FSAs).

Group health plans and health insurers must annually submit to CMS an attestation of compliance with the CAA, 2021 gag clause prohibition. The first Gag Clause Prohibition Compliance Attestation (GCPCA) is due no later than December 31, 2023, covering the period beginning December 27, 2020, or the effective date of the applicable group health plan (if later), through the date of attestation. Subsequent attestations, covering the period since the last preceding attestation, are due by December 31 of each year thereafter. Plans and insurers that do not submit their required attestation by the deadlines may be subject to enforcement action.

For more information, download a copy of our CAA Gag Clause Prohibition and Attestation: A Guide for Employers publication.