Synergy Blog

From Roger Baron: Texas Supreme Court relies on ERISA’s “Saving Clause” to approve state regulation of Stop Loss Insurers

Reprinted with permission from Roger Baron

On May 18th, the Texas Supreme Court handed down an opinion that will disappoint ERISA stop loss insurers seeking to avoid state regulatory law by seeking shelter under the notion of ERISA preemption.  In Texas Department of Insurance v. American National Insurance Company, 2012 WL 1759457, (Tex. May 18, 2012), the issue for resolution was whether ERISA stop loss insurers were subject to state regulation. The Texas Dept. of Insurance (“TDI”) conducted an investigation and found that stop loss insurers were evading regulation.  TDI found that the stop loss insurers were failing to pay assessments due the state risk pool and that the insurers had failed to submit policy forms for approval to TDI.  Both the trial court and the Texas Court of Appeals ruled in favor of the stop loss insurers.  The Texas Supreme Court reversed in a unanimous decision, one justice not participating.  The Court seized upon ERISA’s “saving clause” as the basis for upholding state regulation, stating,

[T]he questions are (1) whether the state can regulate stop-loss insurers who contract with such plans, as it does other direct health-care insurers … and (2) whether it has chosen to do so. The answer to the first question is clearly yes under ERISA’s “insurance savings clause” and the Supreme Court’s decision in Metropolitan.

The Court rejected the argument that a stop loss insurer insures “the plan” and not the “individual participants,” stating,

We agree with [TDI] and hold that stop-loss insurance sold to a self-funded employee health-benefit plan is not reinsurance, but rather direct insurance subject to regulation under the Insurance Code.

To view the opinion click HERE


I wanted to pass my highest recommendation to Synergy who we routinely get involved in cases when Medicare issues come up, especially when dealing with Medicare Set Asides. Synergy went beyond the call of duty in a recent case that was settled and dealt one-on-one with our clients and their family. They spent time on the phone with them to be sure they got all their questions answered and did a fantastic job dealing with Medicare.

J. Daniel Clark
Clark Martino, P.A.

"I recently engaged Synergy to assist with a complicated PTD settlement involving a substantial Medicare Set Aside. The claimant’s wife has been providing full time attendant care which is not Medicare covered. The Synergy nurse was able to do a full analysis of non-Medicare covered expenses which far exceeded the value of the MSA analysis performed by the carrier’s contracted MSA provider. The non- Medicare figures became the main focus of the settlement negotiations and more than doubled the value of the case. Although I could estimate the attendant care figures, the nurse added in other items that I would not have routinely considered. I also asked Synergy to evaluate the EC’s MSA as well as their prescription review. Synergy offered insight about the prescription donut hole which I did not have a clear understanding about. Again, their insight and information added a great deal of value to the overall settlement. Not only did I learn from Synergy but was able to educate my clients in the process. These are very complex and complicated areas; I will use Synergy again and again!"

Rosemary Eure
Lancaster & Eure

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