When it comes to setting insurance rates, Michigan’s no-fault insurance system has been characterized as a “file and use” system. Under this system, insurance companies file their proposed rates with the Department of Insurance and Financial Services. The Michigan Insurance Commissioner then has the opportunity to object to “excessive” rates. If no such objection is made, the insurance company can go ahead and charge those rates to consumers.
]]> Some have criticized the system, arguing that there has never been a declaration that insurance rates are excessive because the Insurance Code defines excessive so vaguely: the language used is “unreasonably high for the insurance coverage provided” and there is not a “reasonable degree of competition.” In other words, the argument goes, the definition is somewhat vague.Another aspect of the law is that insurance companies are supposed to “appropriately” reduce premiums for uncoordinated no-fault policies. No fault benefits are coordinated when they are coordinated with benefits the insurance carrier receives from other insurance policies, while uncoordinated benefits are those which are not so coordinated. The latter are, therefore, sometimes called full benefits. Critics argue that the Insurance Commissioner does not have any defined methodology for making a determination about appropriate reductions in premiums for coordinated no-fault policies.
What does all this mean for insurance companies? For one thing, the public will likely continue to scrutinize insurance carriers in insurance rate-setting. Whether or not this translates into changes in policy remains to be seen. It must be remembered, though, that insurance companies are indeed subject to limitations in setting rates and that they should be cautious in this area to ensure they remain in compliance with state law. Working with experienced legal counsel can help ensure an insurance company’s has proper guidance in minimizing its liabilities in this area.
]]>According to the Michigan Chamber of Commerce, employers should establish monitoring policy which allows for corrective action when certain events take place. Such events include: significant changes in the investment market; amendments in the plan or investment policy; changes in law; receipt of significant news concerning an investment adviser or an investment; and when there are concerns about an investment advisor’s work or the type or location of the investment.
]]> Properly exercising its fiduciary duties under ERISA is not necessarily an easy matter for employers, particularly those who do not have a nuanced understanding of the law. It can be easy to get into trouble, and mistakes in this area can be potentially costly, particularly when an employer is targeted by ERISA litigation.Fiduciary duties apply not only to management of employee retirement accounts, of course, but also to the management of health insurance plans. As with retirement plans, employers and other plan fiduciaries are required to manage health insurance plans for the sole benefit of the participants, act according to the ERISA-consistent documents governing the plan, pay only reasonable expenses under the plan, and act prudently in carrying out their duties under the plan.
Working with experienced legal counsel can help ensure an employer not only understands its fiduciary duties under ERISA with respect to managing health and retirement plans, but also that its policies and practices are consistent with those duties and that its interests are zealously protected when disputes arise.
]]>Both of these aspects of the law came up in a recent federal case involving a dispute between the Department of Labor (DOL) and a former employee. At the heart of the case was the fiduciary duty to monitor appointed investment advisers. The DOL had argued in the case that because the retirement plan fiduciaries were not named as trustees in retirement plan documents, they were not able to take advantage of the protections granted to trustees under the law.
]]> The court ended up ruling in the case, however, that ERISA actually does provide protection to fiduciaries who properly appoint investment advisers to manage plan assets, even if the fiduciaries are not designated as trustees in retirement plan documents. Fiduciaries still do, however, have a duty to monitor appointed investment managers.The duty to monitor does not mean that fiduciaries must directly oversee plan investment decisions, though. The court said it is usually enough for fiduciaries to establish and follow routine procedures for evaluating the need to correct an investment manager’s performance deficiencies. This kind of monitoring is supposed to happen with reasonable regularity, and fiduciaries are required to actually take corrective action when necessary, rather than simply having procedures in place and never utilizing them.
In our next post, we’ll continue looking at the duty to monitor and how it should inform the relationship retirement plan fiduciaries have with appointed investment advisers, as well as fiduciary duties associated with health insurance plans.
]]>Fiduciaries associated with employee retirement accounts are required to administer the plan for the sole benefit of plan participants and beneficiaries. Part of what this entails is prudent management of retirement investments, including diversification to minimize risk of significant losses. Fiduciaries who fail to act prudently in managing investments can be held personally liable for plan losses.
]]> Under ERISA, a fiduciary is any person who has discretionary authority, responsibility or control over plan assets or the administration of the plan, or who provides investment advice for a fee. This includes the employer, the retirement plan administrator, and various other parties. It also includes plan trustees, which are entities or groups of individuals holding retirement plan assets in trust. Trustees are designated in the retirement plan document or appointed by a fiduciary.While fiduciaries can be held liable for mismanagement of a retirement plan, trustees of 401(k) plans are not liable for the acts and omissions of investment managers appointed by named fiduciaries. The exact limits of this rule are important to understand, though, because it can impact how employers, as fiduciaries, monitor the investment advisers they appoint to manage the retirement plans they sponsor.
In our next post, we’ll look at a recent federal case involving this issue, as well as the fiduciary duty to monitor investment advisers, and the impact it could have on how employers approach these matters.
]]>Assignment of benefits agreements allow medical providers to collect benefits under an insurance policy that would ordinarily be payable to the insured. Different states have different laws when it comes to the assignment of the right to insurance benefits. There are a couple important points to understand about Michigan law.
]]> First of all, one limitation on assignment of benefits agreements in Michigan is that the right to collect future no-fault benefits may not be transferred to a third-party. This means that an insured is not able to assign benefits that will be due in the future to a medical provider.Although future insurance benefits may not be transferred to a third party in Michigan, no-fault benefits which are past due or presently due may be transferred. Patients may, then, enter into effective assignment of benefits agreements with medical providers so long as the benefits at issue are already due under the policy.
In addition, although future no-fault benefits may not be assigned to a third party, it is still possible for insured to negotiate future no-fault benefits with their insurance company. Working with an experienced attorney can make this process more effective.
Sources:
Aetna Casualty & Surety Co. v. Starkey, 323 N.W.2d 325 (Mich. Ct. App. 1982)
Professional Rehabilitation Associates, as Assignee of Clifford Lay v. State Farm (1998).
]]>Under Michigan law, automobile insurers have the obligation to pay valid claims and medical bills within 30 days or they face penalty interest payments. Accidents victims who aren’t covered properly have the right to sue their insurance company for no-fault benefits under the terms of their policy. Often, though, it is medical providers who file these lawsuits.
]]> Medical providers usually file these claims when insurance companies refuse to pay claims or terminate coverage for those insured under no-fault policies. Not surprisingly, insurance companies have spread these costs to insured in the form of higher premiums. Last month, however, the Michigan Supreme Court ruled that hospitals, clinics and other medical providers do not have the right to sue insurance companies for payment on bills of patients using no-fault insurance. The decision could have a number of possible effects, though exactly how things will play out remains to be seen.Opponents of the decision say it will force patients to see to it that their insurers pay their medical providers after accidents, and would likely result in an increase in consumer litigation against insurers. Auto insurance providers and other proponents say, however, that the decision could actually reduce costs for consumer if medical providers lower prices to ensure full payment in the event insurance denies coverage.
Both medical providers and the insurance industry, stand to lose something as a result of the decision, though: medical providers may have to start writing off more bills not picked up by no-fault insurance, and both patients and insurers may end up picking up the costs under ordinary health insurance plans.
Another possible outcome is that medical providers may increasingly turn to assignment of benefits arrangements. We’ll say more about this topic in a future post, and the role experienced legal counsel can play in helping insurance companies handle these matters.
Source: Michigan Department of Insurance and Financial Services, Consumer Counselor: Insurance Information for Michigan Consumers, June 2017
]]>Before insurance coverage can begin, all the proper documentation must be drawn up and submitted to the state, the corporate entity must actually be formed and capitalized, and the captive must be licensed. The earlier in the fiscal year a business forms a captive insurance company, the more the business can to benefit in that particular year.
]]> One reason for the importance of timing in forming a captive insurance company is that it can impact jurisdiction selection. Selecting an appropriate jurisdiction for a captive insurance company is important, as the regulatory environment can vary significantly by jurisdiction. Some jurisdictions are more favorable than others, and some popular jurisdictions for incorporation are offshore. Part of the reason for the importance of timing a captive’s formation and licensing is that this can affect the captive’s ability to incorporate offshore. In essence, forming a captive earlier in the year helps to better ensure the availability of offshore incorporation.Other reasons to form captives early in the year are that the earlier a captive is formed, the more premiums the captive will earn to cover early losses, and that forming a captive earlier on allows for proper structuring and funding of the company.
Any business that is considering forming a captive insurance company should work with experienced legal counsel to navigate the legal aspects of the process, part of which is properly timing the formation and licensing of the captive.
]]>Captive insurance is coverage provided by an insurance company completely owned and controlled by the insured business. The purpose of a captive insurance company is to address risks that aren’t adequately covered with ordinary insurance coverage, but an added benefit is that businesses that form captive insurance companies are able to keep the rights and investment income on capital used to fund insurance.
]]> Captive insurance can cover shortfalls in commercial policies, target specific business risks, and can cover the cost of deductibles and excess insurance. Captive insurance can also insure against risks which are more expensive to cover with ordinary commercial policies, and can protect a business from unanticipated denial of coverage and adjustment of claims, in addition to other benefits.Several important points about captive insurance:
In our next post, we’ll say more about this last point, and the role an experienced attorney can play in the formation and planning of a captive insurance company.
]]>Although regulation of the insurance industry at the federal has increased over the years, insurance companies are still mostly regulated at the state level. Compliance with state regulatory requirements is an important task for insurance companies, not only to protect themselves from legal liabilities, but also to earn a strong reputation for fair business dealings with consumers.
]]> In Michigan, the Department of Insurance and Financial Services, specifically its Market Conduct Section, is responsible for overseeing the business practices of insurance companies and ensuring that consumers are being treated fairly. Market practices like sales, advertising, underwriting, and handling of claims all fall within the purview of DIFS.One of the tasks of the DIFS, Market Content Section is to conduct market conduct examinations. These include: limited examinations, which involve requests for information; targeted examination, which are focused on reviewing specific lines of business and specific practices; as well as comprehensive examinations, which involve a full scope review of a company’s business practices. DIFS also conducts audits of insurance companies and agents, with the aim of protecting consumers and monitoring business practices.
Michigan insurance companies need to make sure they understand their legal obligations and that they establish sound policies and procedures for ensuring compliance with both state and federal law. Working with an experienced attorney can help ensure an insurance company is meeting its legal obligations and that any issues which arise are effectively addresses as quickly as possible.
]]>To this end, the Council relies on the expertise of federal and state financial regulators, as well as an independent insurance expert appointed by the President. Roy Woodall, the man who is currently serving as the independent voting member on the Council with expertise in the insurance industry, is set to leave when his term ends this September, and this has larger insurers concerned.
]]> Woodall is currently considered to be the most influential person in the federal regulation of large insurance companies, since there is no federal insurance regulator at present and the Council has the ability to determine whether large insurance companies are subject to higher capital requirements and oversight of the Federal Reserve.Large insurers are concerned that Woodall’s departure, without a quick replacement by President Trump, will spell trouble for them. Some of the insurance companies that have been placed under increased federal oversight are seeking to avoid that oversight, and believe they will be at a disadvantage without a replacement for Woodall. Nevertheless, he does have a reputation for neutrality.
For large insurance companies, of course, compliance with insurance regulations is an essential aspect of doing business. States have long been regulated at the state level, but recent years have seen the federal government’s growing influence in insurance regulation. In our next post, we’ll say a bit more about this, as well as the importance of working with an experienced attorney to effectively manage legal and regulatory compliance efforts.
]]>Employment contracts, particularly for high-level employees, often do make modifications on the at-will employment rule. Typically, these agreements give the employee bolstered job security by requiring the employer to provide a just reason for termination, or to follow a set procedure before terminating the employee. Whatever the specifics of the agreement, the employer is not able to terminate the relationship unconditionally.
]]> For employers, it is important to establish sound policies for negotiating employment agreements with respect to termination of the employment relationship. Of particular importance is ensuring uniformity between employment agreement and employee handbooks and other materials provided to employees. Employers need to make sure they avoid language in these other materials which would cause employees to believe they have job protections they, in fact, do not.Employers also need to be sure, of course, that they are able to skillfully comply with all federal and state regulations surrounding the issues of discrimination, retaliation, and other employee protections related to the employment relationship. Many problems can be avoided simply by thorough planning and training, and by being consistent. When problems do arise, and it becomes necessary to defend the business against charges of wrongful termination, whether because of breach of contract or violation of statutory or common law duties, an experienced attorney can help ensure a company's rights and interests are zealously advocated.
]]>At-will employment is the default rule in every state except Montana, where employees have greater protections from termination. The general rule of at-will employment does admit of certain exceptions, though, and some of these are quite important. First of all, two important exceptions are illegal discrimination and retaliation.
]]> Illegal discrimination is prohibited under both federal and state statutes. Different statutes vary in the protections provided, but generally prohibit employers from basing employment decisions on an employee’s membership in a protected class. Protected classes include race, color, religion, sex, nation of origin, age, and disability or veteran status. Both federal and state laws also protect employees from retaliating against an employee for engaging in protected activities. Protected activity includes reporting violations of law, including illegal discrimination,Beyond these statutes, some states recognize certain common law based exceptions to the at-will rule, such as public policy, implied contracts of employment, implied covenants of good faith and fair dealing, tort-based claims which limit at-will employment, and promissory estoppel, which is an equitable remedy that can limit at-will employment under certain circumstances.
In our next post, we’ll say more about this issue, as well as how an experienced business law attorney can help provide zealous advocacy and sound counsel in the context of wrongful termination disputes.
]]>As with any other profession, midwives face unique challenges and are exposed to unique liabilities. Like other health care professionals, midwives have to consider the scope of their practice and implement appropriate boundaries, keeping especially in mind the prohibitions imposed on them by law. This includes abiding by the rules for prescribing medications, for midwives who have the ability to do so.
]]> Determining whether a woman is properly classified as high-risk or low-risk, establishing a clear protocol for transfer to a hospital or physician specific to the patient, and obtaining informed consent from the patient, are all critical aspects of midwife practice, as is following reporting requirements.When a midwife, or any other health care professional, faces potential liability for mishandling a patient, it is important to work with an experienced attorney to ensure they have appropriate advocacy under the circumstances of the case. This includes ensuring that the allegations against them are factual and supported by reliable evidence, establishing the appropriate standard of care in the case and ensuring the court has all the facts necessary to determine whether that standard was kept, and taking advantage of the various protections available throughout the legal process.
Malpractice liability can be costly, for both professionals and insurers, and working with experienced legal counsel can help ensure that a professional and the insurer implicated by allegations of malpractice has the best possible representation in the case.
]]>A small percentage of women do opt to deliver at home, though, and make use of midwife services in doing so. In Michigan, there are several types of midwives: Certified Nurse Midwives; Direct-Entry Midwives; and Certified Professional Midwives.
]]> Certified Professional Midwives are required to go through three to six years of training in academic work, skill development and experience assisting at a certain number of deliveries. At the end of the process, they are credentialed. Direct Entry Midwives may go through a similar training process as CPMs, but don’t have the credentials.Then there is the Certified Nurse Midwife designation, which allows a practitioner to deliver babies in a hospital setting. CNWs have been required to be licensed, unlike other midwives, and are regulated by the Michigan Board of Nursing. Up until recently, other types of midwives in Michigan were not required to be licensed. That changed, though, under a measure signed into law earlier this year. Now, all midwives in the state of Michigan are required to be licensed to practice.
The law also establishes other requirements on all midwives, including the requirement to obtain informed consent from patients and to set up plans to transfer the patient to a physician if necessary. Administration of prescription drugs will also be overseen by a new state board.
In our next post, we’ll say a bit more about the law, and then about the importance for midwives, and other health care professionals for that matter, of working with an experienced attorney when they are accused of harming patients.
]]>Another potential strategy for addressing potential incapacity, besides those we’ve already mentioned, is to establish a living trust for mental incapacity. A living trust is a trust created during the lifetime of the grantor, and in which the trustee is the grantor and also the sole lifetime beneficiary of the trust. The grantor names a successor trustee for the trust in case the grantor loses mental capacity to manage the assets, as well as successor beneficiaries to receive the assets at the grantor’s death.
]]> One important point about a living trust is that the terms of may be modified, or the trust may be altogether revoked, until death or incapacity, providing flexibility for the grantor in managing the assets. Because of this great flexibility, though, living trusts don’t have the same tax benefits as other types of trusts. Neither do living trusts protect assets from creditor claims, which is an important point to keep in mind as well.One of the benefits of a living trust is that it can allow a grantor to avoid probate court, provided that all the grantor’s property at death has been transferred to the living trust. Grantors who want to ensure that this occurs should be sure to provide the appropriate instructions in his or her financial power of attorney document. Typically, grantors will also create a pour-over will as a safety net to catch any property that has not been transferred to the trust at prior to death.
In a future post, we’ll at how living trusts function with respect to Medicaid planning for long-term care.
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