|Four-County Community Services, Inc. v. FIA Administrators,|
Group's Suit Against TPA For Failure To Timely File Stop Loss Claim Not An ERISA Case (Four-County Community Services, Inc. v. FIA Administrators, Inc., 2003 U.S. Dist. LEXIS 23462 (M.D.N.C. 12/30/03)
Comment: One recurring fact pattern in stop-loss related disputes is a Third-Party Administrator's ("TPA's") alleged failure to timely file a claim for reimbursement under the stop-loss contract, resulting in a loss to the insured employer group. Often, the reason a claim for reimbursement was not timely filed with the stop loss carrier's Managing General Underwriter ("MGU") is that a given claim was not paid by the TPA for the group until after the expiration of the applicable contract period as specified in the policy. This is sometimes the fault of the TPA, and other times the fault of the group for not making funds available to the TPA to pay the claim on time. Usually, the issue of who is responsible for the failure to timely pay is disputed. In any event, most all TPA agreements obligate the TPA to promptly file proper claims for reimbursement with the carrier's MGU, such that an allegation that this was not done constitutes a claim for breach of contract as well as for the tort of negligence.
Some confusion has arisen as to whether a group's claim against its TPA for negligence or breach of contract in the performance of its duties as a Third Party Administrator for the employer's benefit plan arises under ERISA, and is therefore pre-empted by federal law. As this case decides, "an employer's state law tort and contract claims against its plan administrator [do] not sufficiently 'relate to' the employee benefit plan such that the claim is preempted by ERISA." Opinion, p5. Courts within the Ninth, Tenth and Fifth Circuits had previously decided the issue the same way. See Opinion at p.5, note 1. However, there is authority to the contrary.
Read the Court's full opinion here .