What Constitutes as Private Rights of Action Under the Affordable Care Act?
The implementation of the Affordable Care Act (ACA) resulted in amendments to several federal statutes, including the Employee Retirement Income Security Act of 1974. ERISA, created to protect the rights of individuals participating in employee benefit plans, mandates that an employer must fulfill certain requirements if an employer chooses to establish an employee benefits plan. ACA’s new coverage mandates create opportunities for litigation to arise both on a class action and single plaintiff level under an ERISA claim.
Sec. 502(a) of ERISA authorizes private plaintiffs, whether participants or beneficiaries, to bring actions against a plan to either recover benefits or to enforce or clarify the rights of the plaintiffs under the terms of the plan. As such, private individuals may sue companies under ERISA for failing to comply with ACA’s requirements.
Possible areas for litigation include:
Causes of action can be brought to enforce ACA’s coverage mandates including coverage for preventive care, pre-existing conditions, and dependent children until age 26, as well as the elimination of annual and lifetime dollar limits on “essential health benefits.”
These claims will likely be those that challenge
- the manner in which a plan implements or administers a coverage mandate
- the manner in which a coverage mandate has been communicated to participants.
External review requirement
ERISA Section 503 requires that plan participants have access to claim procedures related to an adverse benefit determination. Prior to ACA, the review was an internal process. The concern was that many Americans were, and would be, denied essential medical coverage.
The new requirement institutes a checks and balances approach by enlisting an external review process provided by an independent review organization (IRO). The external review process, which occurs after the internal claims process, is the final, binding determination regarding health care coverage.
Litigation regarding IROs would likely take one of two forms:
- challenges to a plan’s implementation of the external review process
- disputes over final IRO benefit determinations
ACA requires employers, with more than 50 full-time employees, to provide affordable health care to them or pay a penalty. Under the guidelines, any employee who works 30 hours or more a week will be considered full-time. Employers attempting to avoid these ACA coverage mandates by realigning their workforces (with more employees working less than 30 hours a week) risk suit under the statute’s whistleblower protections and ERISA Section 510, which prohibits interference with a participant’s benefits or other rights
Important Exception: ACA’s modifications of ERISA do not extend to grandfathered health plans, which are plans instituted on or before March 23, 2010.
That said, however, a participant may be able to challenge a plan’s grandfathered status on the grounds that the plan administrator failed to adequately communicate the plan’s status. A victory would result in the loss of grandfathered status would subject the plan to certain additional coverage mandates, and could further subject the plan to claims for benefits pursuant to those mandates.