742 F.3d 1319 (11th Cir. 2014), 13-10349, America's Health Ins. Plans v. Hudgens
|Citation:||742 F.3d 1319|
|Opinion Judge:||MIDDLEBROOKS, District Judge:|
|Party Name:||AMERICA'S HEALTH INSURANCE PLANS, Plaintiff-Appellee, v. RALPH T. HUDGENS, in his Official Capacity as Georgia Insurance and Safety Fire Commissioner, Defendant-Appellant|
|Attorney:||For AMERICA'S HEALTH INSURANCE PLANS, Plaintiff - Appellee: Miguel A. Estrada, Nikesh Jindal, Geoffrey M. Sigler, Gibson, Dunn & Crutcher LLP, WASHINGTON, DC; Bruce Perrin Brown, Bruce P. Brown Law, ATLANTA, GA; James A. Washburn, McKenna Long & Aldridge, LLP, ATLANTA, GA. For RALPH T. HUDGENS, i...|
|Judge Panel:||Before HILL, and COX, Circuit Judges and MIDDLEBROOKS,[*] District Judge.|
|Case Date:||February 14, 2014|
|Court:||United States Courts of Appeals, Court of Appeals for the Eleventh Circuit|
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Appeal from the United States District Court for the Northern District of Georgia. D.C. Docket No. 1:12-cv-02978-WSD.
This appeal is taken from an opinion and order by the District Court for the Northern District of Georgia preliminarily enjoining Defendant Ralph T. Hudgens (the " Commissioner" ), in his official capacity as Georgia Insurance and Safety Fire Commissioner, from enforcing several provisions of the Georgia Code as preempted by Section 514 of the Employee Retirement
Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § § 1144(a).
Before getting into the merits of this case, it is helpful to understand the two general models that employers use to provide health care to their employees. One way is through an " insured" health benefit plan. In this situation, ACME Corporation might enter into a contract with an insurance company for a fixed cost to provide health benefits to ACME's employees.1 The insurance company will process claims for health care payments, utilizing its own funds to pay claims covered by the health insurance plan. The insurance company -- not ACME -- will assume the entire risk in paying out health care claims.
Alternatively, ACME Corporation might provide its employees with " self-funded" or " self-insured" health benefit plans, in which case ACME would pay out any claims from its own funds.2 Thus, in this model, it would be ACME Corporation -- the employer -- that endures the financial risk associated with being responsible for paying health care charges incurred by its employees. Additionally, employers providing self-funded plans often contract with third-party administrators (" TPAs" ) to perform certain administrative functions for the employer and each plan.3 A TPA's administrative duties might include processing claims, paying claims, and managing the everyday functioning of a plan.
This case deals with the latter-described health care model -- " self-funded" health benefit plans -- and the TPAs of self-funded plans. For the reasons set forth below, we affirm.
In May 2011, the State of Georgia enacted the Insurance Delivery Enhancement Act of 2011 (" IDEA" ), which amends certain portions of Georgia's Insurance Code, including Georgia's " Prompt Pay" laws. These Prompt Pay laws had been in place since 1999 and required " insurers" to either pay a claim for benefits, or give notice of why a claim would not be paid, within fifteen working days after receipt of a claim. See O.C.G.A. § 33-24-59.5(b)(1) (2005). If an insurer did not comply with the Prompt Pay requirements, the insurer would have to pay annual interest of eighteen percent on the proceeds or benefits due under the terms of the plan. See id. § 33-24-59.5(c).
Under the 1999 Prompt Pay statute, the statutory definition of " insurer" included " accident and sickness insurers," but expressly excluded entities that provide for the financing or delivery of health care services through a health benefit plan " subject to the exclusive jurisdiction of the federal Employee Retirement Income Security Act of 1974 [(" ERISA" )], 29 U.S.C. Section 1001, et seq." O.C.G.A. § 33-24-59.5(a)(3) (2005). Thus, the 1999 Prompt Pay statute applied to insured ERISA plans (where employers contract with insurance companies to provide health insurance), but not to self-funded ERISA plans (where the employer bears the ultimate risk).
In recent years, fewer and fewer of Georgia's health benefits payors have become
subject to the Prompt Pay laws because of a rising trend amongst employers to provide self-funded plans to employees. In response to the abated impact the 1999 Prompt Pay laws have on health benefits payors, the Georgia General Assembly passed IDEA, and Georgia's Governor subsequently signed IDEA into law. Several sections of IDEA, if placed into effect, would extend the prompt-pay restrictions to self-funded health plans and their TPAs -- something the original statute expressly excluded from its breadth -- and impose additional timeliness restrictions and penalties.
A. Section 4
Section 4 of IDEA amends a section of the Georgia Code that governs the licensure of insurance " administrators." Section 4 does several things. First, it expands the definition of " administrator" to include business entities that provide claims processing services " on behalf of a single or multiple employer self-insurance health plan" -- or TPAs. Second, it removes a provision that exempted from licensure a " business entity that acts solely as an administrator of one or more bona fide employee benefit plans established by an employer or an employee organization, or both, for whom the insurance laws of this state are preempted pursuant to [ERISA]." Third, Section 4 adds a new subsection providing that " administrators" (which now includes TPAs) are subject to the 1999 Prompt Pay statute, as amended, unless the self-insured health plan failed to fund the plan enough to allow the TPA to pay the claim.4
B. Section 5
Section 5 of IDEA amends the Prompt Pay statute as it relates to the timely payment of health benefits. This Section changes the substantive prompt-pay requirements by: (1) providing new deadlines for payment or notice -- fifteen days for electronic claims and thirty days for paper claims for processing and paying (or denying) a claim; (2) reducing the interest rate on untimely payments from eighteen percent to twelve percent; and (3) adding a provision authorizing the Commissioner to impose an " administrative penalty" on an insurer that fails to timely process at least ninety-five percent of its claims in a financial quarter. Section 5 charges the Commissioner with the duty to collect timeliness data and impose the aforementioned penalties.
Additionally, Section 5 changes certain statutory definitions in the Prompt Pay statute. It amends the definition of " health benefit plan" to specifically include a " self-insured plan." It also changes the Prompt Pay statute's definition of " insurer" in three ways. First, it deletes the express exemption for ERISA-regulated self-funded plans, which effectively includes an ERISA " self-insured health plan" in the definition of " insurer." Second, it adds " the plan administrator of any health plan" and " any other administrator as defined in... Code Section 33-23-100 [Section 4]" to the definition of " insurer." This modification brings TPAs for self-funded plans within the breadth of the Prompt Pay regulations. Third, Section 5 adds a new subsection that states: " This Code section shall be applicable when an insurer is adjudicating claims for its fully insured business or its business as a third-party administrator."
C. Section 6
Section 6 of IDEA creates a new section of the Georgia Code -- Section 33-24-59.14 -- that governs payments made by
" administrators" and " insurers" to health care providers and facilities claiming benefits under health benefit plans. Section 6's substantive requirements and penalties are identical to those set forth in Section 5. Section 6 expressly adopts Section 5's definitions of " benefits" and " health benefits plans." By cross-reference, Section 6 also provides the definition of " administrator" as defined in Section 4.
Section 6, however, provides a different definition for " insurer" from what is provided in Section 5. Unlike Section 5, Section 6's definition of " insurer" does not include " any self-insured health benefit plan" or " any other administrator as defined in paragraph (1) of subsection (a) of Code Section 33-23-100 [Section 4]" ; however, Section 6's definition of insurer does include " an accident and sickness insurer... or any similar entity, which entity provides for the financing or delivery of any health plan." As noted above, " health benefit plan" under Section 6 includes self-insured plans.
On August 28, 2012, appellee America's Health Insurance Plans (" AHIP" )5 filed an action for declaratory judgment against the Commissioner, as the State official charged with enforcing IDEA. Specifically, AHIP's complaint seeks a declaration that Sections 4, 5, and 6 of IDEA, as applied to...
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