This will provide evidence that the TPA was not unilaterally making the decision about whether to pay premiums or benefits, and will provide valuable evidence in the event of a lawsuit to show that it was the plan sponsor, not the TPA, that had the final authority to decide whether to pay the disputed item. Finally, the problem in our case could have been avoided if more attention had been paid to the TPA s own business practices. Specifically, premiums and claims were paid by the TPA on the basis of the insurance company invoices. In other words, if the insurance company charged for a premium or claim for a participant, the TPA paid the premium or benefit. Had the TPA paid based on its own eligibility records, rather than the insurance invoices, there is a significant likelihood that premiums and claims would not have been paid for most of the ineligible participants in question.
Every business has risk.
Reprinted with permission from The Benefits Professional Update, First Quarter Update.