Benefits and Compensation

Employer Sues to Block State’s Demand for Health Plan Data

An insurance company recently sued the state of Vermont to block its attempt to get details on the employees and family members enrolled in the company’s group health plan, and the actual claims they’ve submitted.

Vermont health care regulators want this information for a database designed to measure and improve the quality of health care in the state. A state law directs them to gather eligibility and claims data from all insurers, third-party administrators and pharmacy benefits managers registered to do business in Vermont.

But Liberty Mutual Insurance Co. says this information on participants in its self-funded health plan is shielded by ERISA. The company is seeking an injunction against the state’s subpoena, arguing that ERISA’s fiduciary duty prohibits them from disclosing it, and that ERISA preemption precludes the state from demanding it.

Vermont’s action “intrudes upon the uniform and exclusive regulation of employee benefit plans that Congress provided under ERISA,” the company argues in its federal court brief. “Vermont cannot impose additional reporting requirements not contemplated by ERISA simply by deeming the Plan to be an insurance company.”

Moreover, complying with the subpoena would violate ERISA requirement to administer the plan solely for the benefit of its participants and beneficiaries, the brief continues. “As an ERISA fiduciary, Liberty Mutual has undertaken to safeguard against the disclosure of private individuals’ confidential medical records and data,” the company argues, while the state agency has no such duty and could “make this information available to other state agencies, researchers, and insurers” with no control by the plan or its participants.

This dispute is part of a larger trend, according to the HR Policy Association. Many states are setting up similar databases, raising “concern that such states may attempt to require employers to turn over similar sensitive and confidential plan participant information,” according to the group.

Information on HIPAA and other privacy issues in health benefits administration can be found in the Employer’s Guide to HIPAA Privacy Requirements.

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