Benefits Unreasonably Denied

My wife has worked for a fortune 500 company for 9 years. We had our second child about 7 weeks ago. Before going on leave she contacted HR to make sure she had all the paperwork in order, including the return to work forms etc. She was told that everything was in order and that she had all the correct forms for her return to work. She was never made aware of an additional requirement to file a form to add the new child within 30 days of birth. Obviously she notified the employer (she is on maternity leave still), and I personally notified the insurance company the day of the birth. There is no dispute on this. In fact, in an email, the HR director acknowledges that she made a good faith effort to comply.

After about 5 weeks, we started getting correspondence from the healthcare providers indicating the insurance company was rejecting claims. I contacted the insurance company and was told the baby was never added and that the employer needed to add the baby to the plan before they could process the claims. My wife contacted HR to get this done. The response was that they could not add the child after the 30 day window had closed. Doing so would put the tax-exempt status of the entire plan in jeopardy because it was regulated by the federal ERISA statute. Her suggestion was that we try and put the baby on my employer�s plan (I am self employed and on her benefits as a result), or that they could adjust her flexible spending account so that we can go buy our own insurance. I clearly saw the conflict in her answer that my employer could add our baby after the 30 day window, but they could not. If both plans are regulated by the same federal law, another plan could not add the child either. I then went and contacted the IRS and spoke to very helpful agent that works in the area. We spoke for a bout 30 to 45 minutes and he read sections to me, etc. His response was that it certainly was not a tax issue.

I shared the result of my discussion with the HR director, who was clearly upset that I did not simply take her explanation and go away. Her new response was that the plan rules prohibit it, end of story. I have requested, but not yet received the full plan document.

This is clearly one paperwork error in an industry full of paperwork errors. There is no fraud, and no suggestion of any fraud. The company has acknowledged (in an email) that we made every reasonable attempt to comply with the requirements and it was reasonable for us to believe we had the baby on the plan. However, they have dug in hard on not allowing the baby to be added.

A complicating factor is this, after she returns to work, she is going to reduce her hours to 24 hrs / week, still enough for full benefits. We are unaware of the company ever allowing a woman to go part time after having a child. Other women have generally left on their own after having children. My wife has a very unique skill set and is often used as a public face of the company for press type and customer type events. We are confident that this is the only reason they agreed to the part time schedule. Additionally, the same HR director with whom I have been corresponding has made disparaging remarks about how costly it is for the company when an employee has a child during the annual explanation of benefits to all the employees.

Bottom Line: Does this rise to the level of unreasonably denying benefits / compensation earned? Is there a legal case? This really looks like a budget issue for the company and nothing else. It appears to me as though they believe they have a technicality to escape paying benefits and they are holding on to it.

Without the benefits, the job is not worth keeping. I think they may know this too. But for us, all options are on the table to secure these benefits that have been earned. If this can be settled amicably, she intends to continue to work there indefinitely.

1 answer  |  asked Jun 13, 2007 08:56 AM [EST]  |  applies to Illinois

Answers (1)

Anthony Cameron
Righteous Claim--Need Counsel

I'm three hundred miles from you and can't really do you any good. This claim is almost certainly winnable and maybe even subject to amicable resolution. It sounds like the HR person is hung up on "enrollment periods" but fails to appreciate that the employer is an agent of the insurer and the insurer is an agent of the employer. Sign up with one you've signed up with the other.

HR people tend to cling to "we've always done it that way" positions until Vice Presidents and legal departments dissuade them. If there is war, there is a federal law dealing with such employee benefits and their administration.

You need a MEL attorney for the expertise of understanding ERISA/PP Act and TO GET YOUR WIFE OUT OF A CONFLICT SITUATION WITH THE EMPLOYER. Run, don't walk, to a MEL attorney. This can be fixed before it goes completely stinky.

Good luck.

Anthony B. Cameron

posted by Anthony Cameron  |  Jun 13, 2007 6:18 PM [EST]

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