By: HUB’s EB Compliance Team

The United States Department of Labor (“DOL”) recently released a letter regarding whether plan participants or beneficiaries can hire an entity to assist on an appeal of a claim. The DOL Information Letter stated that a plan cannot stop a person who is making a claim against the plan (a “claimant”) from designating an authorized representative of their own choosing.

Background

The DOL claims procedure regulations set forth minimum requirements for how plans respond to claims under ERISA. Under the regulations, a claimant has the right to appoint an authorized representative to act on his or her behalf in connection with an initial claim, an appeal, or both. However, a special rule for urgent care claims requires plans to recognize any health care professional with knowledge of a claimant’s medical condition as the claimant’s authorized representative. This makes sense because the claimant may not be in a position to designate someone as a representative if their claim is urgent. Additionally, if the claim is urgent, the time spent formally designating a representative could be costly to the patient.

Referring to DOL FAQs on claims procedures, the Information Letter notes that when an authorized representative has been designated to act and receive notices on a claimant’s behalf, the plan should direct communications and notices to the authorized representative unless the claimant directs otherwise. Both the claimant and the plan should make clear the extent of the authorized representative’s authority.

Takeaways

The letter does not break new ground, but confirms what has been longstanding DOL policy in this area. That said, it does bring to mind a few good reminders for plans and employers.

First, plans may want to have formal procedures for designating representatives. Any procedures for designating an authorized representative must be set out in the plan’s claims procedures and in the wrap plan document and SPD. If a plan is insured, the insurer’s policy will control.

Second, the plan’s procedure for authorized representative designations may include requiring a written authorization signed by the claimant on a form specified by the plan. Employers should think carefully about what information they need in the designation. For example, employers may what include the representative’s contact information, the scope of his or her authority (initial claims, appeals, etc.), and whether communications should be sent to both the representative and the claimant or only the representative.

Third, designating an authorized representative is not the same as executing an assignment of benefits. The assignment lets the healthcare provider “stand in the shoes” of the claimant, giving the provider full authority to make all decisions, and receive all payments, related to the claim. By contrast, an authorized representative acts on behalf of the claimant, but ultimately the rights belong to the claimant. Plans may want to be clear in their procedures and plan documents that they will not respect assignments of benefits and that a designation of an authorized representative does not create an assignment of benefits.

Fourth, note that information disclosed to an authorized representative during the claims process will likely contain PHI, so a plan should obtain a HIPAA-compliant authorization from the claimant as part of having the claimant designate a representative.

Finally, employers who deal regularly with claims should consider reviewing the FAQs and Information Letter to remind themselves of the rules regarding designations of representatives. They may also want to review the claims procedures in their relevant plan documents.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

The information herein is intended to be educational only and is based on information that is generally available. HUB International makes no representation or warranty as to its accuracy and is not obligated to update the information should it change in the future. The information is not intended to be legal or tax advice. Consult your attorney and/or professional advisor as to your organization’s specific circumstances and legal, tax or other requirements.