I keep odd and varied company and sometimes need the Urban dictionary to answer questions like: “what’s realer – the guvmint tellin’ you what’s up or your own damn lyin’ eyes?”
I’ll go with my lying eyes. So I asked to see the bona fide association documents for myself.
Insurance producers and employers have asked in vain about the legality of various association health plans offering large group coverage to small employers. I thought these issues would be sorted out months ago; but, the Insurance Commissioner continues to carefully reflect upon these difficult questions when not shotgunning rules and hosting PowerPoints.
To recap, Washington State exempted small employer health plans purchased through trade associations from Washington’s small group reforms over a decade ago. The exemptions still exist. Along came federal health care reform and the Insurance Commissioner (OIC) decided to enforce ERISA’s definition of “employer plan” that allows an association of employers to be treated as a single large group plan only if it’s “bona fide.” The trouble with the OIC’s effort has been its strange and inconsistent application of its own view of federal law and its slow drifting silence as the employer health plan market adjusts to change you can’t believe.
Luckily, that’s why our founding fathers gave us the Public Disclosure Act – self-help. Last week, I finally received documents in response to my Public Disclosure Request of April 15, 2013:
“Please provide me with the documents submitted by carriers during the period of April 15, 2013 to April 15, 2014 in support of an association’s treatment as a “bona fide” single, large group under ERISA.
The OIC currently describes these documents submitted in support of a large group filing on behalf of an “association health plan” as follows:
3. Must submit one pdf document titled “Evidence as an Employer” and file it under the Supporting Documentation Tab. The document must include, at a minimum, the following information:
a. A copy of the association bylaws;
b. A copy of the trust agreement or other organizational document which shows the purpose of the association and who governs the association;
c. A statement of the association’s history;
d. A copy of the occupational categories/ industry classifications comprising the employers in the association;
e. An advisory opinion from the Federal Department of Labor demonstrating the group is qualified to purchase association coverage.
f. In absence of a Federal Department of Labor opinion, an opinion from an attorney explaining how and why the association qualifies as a true employer under 29 U.S.C. § 1002(5) of the Employee Retirement Income Security Act (ERISA) of 1974“
[Washington State SERFF Health and Disability Form Filing General Instructions – Page 11 of 17 Ed.16 4/8/2014]
I am requesting documents meeting the description listed above whether or not these documents were filed purusant to the latest version of the OIC filing requirements or latest rules however these documents are denominated by the carriers when submitted to the OIC.”
Of course, I would have received the documents much sooner if I had been clearer in my original request from March 25th which I learned had been confusing:
Dear Mr. Conniff,
We interpret your request as asking “For all large group plans offered by associations that the OIC approves to be filed, give me the evidence submitted by carriers that the OIC relied on to determine that the association is a bona fide employer under ERISA for purposes of offering large group coverage to employee member.”
At this time we have not approved any to be filed and would therefore not have any responsive documents to your request. [Emphasis especially added here]
If this is not correct please identify further the documents you are looking for.
[Note to dear, tender readers: this is why lawyers are picky, verbose, pedantic, and did I say verbose?]
Since this article is already too long, I will make this part 1 of a series of articles sharing these documents. Here I will focus on the largest group of filings, those reviewed by the Davis Wright Tremaine law firm (DWT) on behalf of their association clients.
Of all of the associations, DWT was the most successful measured by the number of approval letters received from OIC counsel. They were also the most prolific in providing opinions as to the bona fide status of association health plans. The OIC counsel letters were to be filed along with rate and form filings. OIC later discontinued the practice of issuing opinion letters. Many other associations were told to “buzz off” after the initial burst of OIC letters. Here are some of the groups on whose behalf DWT obtained OIC counsel letters:
Aerospace Industry Health Trust – OIC letter March 26, 2013
Associated Industries Trust – OIC letter March 26, 2013
Agriculture Industry Health Trust – OIC letter May 7, 2013
Washington Clean Technology Alliance – OIC letter March 26, 2013
Here are the opinion letters by DWT on behalf of associations filing as bona fide association plans:
O.K,, o.k., o.k., I’ll give you a break and continue in another article; but, you get the picture. All of the DWT opinion letters are conditioned upon the certification of the plan administrator. These certifications to DWT are listed and linked below. What’s more fascinating is the diversity of each Trust. The employer groups eligible to participate in each of these trusts is also listed and linked below.
But, before you look at these lists and certifications, consider the standard expressed by the United States Department of Labor (DOL) in an opinion rejecting the Bend, Oregon chamber of commerce health plan as a “bona fide” association. You might understand why those associations who couldn’t get letters from the OIC might be a little bit confused right now.
“Bend Chamber’s structure is not the type of connection between employer members that the Department requires for a group or association of employers to sponsor a single “multiple employer” plan. Rather, the Department would view the employers that use the Bend Chamber’s arrangement as each having established separate employee benefit plans for their employees. Although we do not question the Bend Chamber’s status as a genuine regional chamber of commerce with legitimate business and associational purposes, the primary economic nexus between the member employers is a commitment to private business development in a common geographic area. This would appear to open membership in the Bend Chamber, and in turn participation in the proposed health insurance arrangement, to virtually any employer in the region.” [DOL Advisory Opinion 2008-07A]
In the DOL’s opinion, the process for arriving at this type of decision requires an analysis of the facts and circumstances in each case.
“A determination whether there is a bona fide employer group or association for this ERISA purpose must be made on the basis of all the facts and circumstances involved. Among the factors considered are the following: how members are solicited; who is entitled to participate and who actually participates in the association; the process by which the association was formed, the purposes for which it was formed, and what, if any, were the preexisting relationships of its members; the powers, rights, and privileges of employer members that exist by reason of their status as employers; and who actually controls and directs the activities and operations of the benefit program. The employers that participate in a benefit program must, either directly or indirectly, exercise control over the program, both in form and in substance, in order to act as a bona fide employer group or association with respect to the program.” [id.]
Here are the lists and links of Trust certifications followed by employer groups eligible for each “bona fide” trust.
That’s the end of Part 1. Now it’s time for me to revisit the association plans that I advised could never make it as a bona fide association.