Plan loses $800,000 after TPA delays paying claim.
So are the allegations in this case heading to bench trial in the U.S. District Court for the Western District of North Carolina.
Technibilt had stop-loss reinsurance coverage for the claim, but the coverage would run out on the claim if Blue Cross, the third party administrator, did not pay the claim before year's end. Needless to say, Blue Cross did not pay it in time to avoid Technibilt's $800,000 loss.
Technibilt sued Blue Cross for breach of fiduciary duty. Technibilt tried, it claimed, to get Blue Cross to pay the claim before the end of the year, when Technibilt's reimbursement coverage would end.
Blue Cross conceded that a failure to timely pay a claim could breach a fiduciary duty to a plan, but argued Blue Cross only had to pay this claim after its "Host Blue" had fully reviewed the claim.
Technibilt argued that Blue Cross was imprudent in not taking action once Blue Cross understood the importance of paying the claim before the end of the year.
After reading an affidavit from an employee of the "Host Blue," the court concluded that the Host Blue did have a process in place to expedite consideration of claims but that the process was neither used nor even requested to be used.
The court ruled that the loss of reimbursement benefits should be considered a loss to the plan itself, not merely to Technibilt. Now the case proceeds to determination of the facts, including causation, at a bench trial.
See Technibilt Group Insurance Plan, et al. v. Blue Cross and Blue Shield of North Carolina, Civil Action No. 5:19-CV-00079-KDB-DCK (U.S. D.C. W.D. N.C. March 25, 2021).