Opinion ID: 2123847
Heading Depth: 1
Heading Rank: 1

Heading: Distinction Between Termination of Group Contract and Termination of Coverage for Individual Employees.

Text: At the outset, we must clarify the conflicting claims of the parties concerning the distinction between termination of the employer's group contract with the HMO and termination of the coverage for individual employees enrolled under the group plan. We begin this discussion by expressing our belief that these two matters are in fact inseparable. There is no realistic way of viewing the existence of a group medical plan other than through its effect on the members of the group. Lifeline Ambulance urges, with support in the record, that it is pursuing this challenge as the agent of its employees pursuant to a specific contract clause. Its right to do so was acknowledged by the administrative law judge who heard this matter pursuant to contested case procedure. In determining the merits of the challenge to contract termination, however, both the administrative law judge and the insurance commissioner determined that notice to the employees covered by the plan was not necessary in order to terminate their rights under the group contract. The administrative law judge appeared to conclude that Lifeline Ambulance's employees were enrollees as defined in section 514B.1(4). He concluded, however, that language contained in Iowa Code section 509B.5(2) (1987) makes the enrollee-notice requirement of section 514B.17 inapplicable to enrollees under group contracts. The administrative law judge ruled that section 509B.5(2) provides that: (1) the employer, rather than the HMO, is to give notice to the employees of termination of the group contract; (2) the HMO's liability to members of the group ends immediately upon the termination of the group plan (or possibly prior thereto); and (3) until the employer gives notice to the employees that the group contract has been canceled, it remains solely responsible for providing health care benefits under the plan. The insurance commissioner in a brief order stated that the decision of the administrative law judge is upheld in its entirety. Language in that order, however, indicates some doubt on the part of the commissioner that Lifeline Ambulance had standing to pursue claims of legal entitlement on the part of its employees. We conclude that Lifeline Ambulance does have standing to argue that its employees were entitled to notice of termination of benefits under section 514B.17. The group contract makes it the agent of its employees for this purpose. Moreover, due in part to the legal reasoning of the agency and the district court concerning Lifeline Ambulance's personal liability under section 509B.5(2), it has a personal stake in the impending controversy.