Judge in Florida rules health reform unconstitutional

Today in Florida, U.S. District judge Roger Vinsin ruled on behalf of plaintiffs in a 26 state lawsuit that the Health Care Reform law unconstitutional. This ruling goes beyond the Virginia ruling which focused solely on the constitutionality of employer mandate and whether the government over reached its authority of requiring citizens to purchase a product. Vinsin expanded on that ruling and explained that because the individual mandate is unconstitutional, and more importantly, that the mandate provision is not severable from the rest of the law, he declared the entire law unconstitutional. This is a much more sweeping ruling than had been expected. He however, stopped short of stopping the law from going forward.

Vinson’s ruling will most likely be appealed to the U.S. Court of Appeals in Atlanta and ultimately to the U.S. Supreme Court. There is also an appeal scheduled for the Virginia ruling in May.

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About the Author

Christopher Nadeau is a Principal at William Gallagher Associates (WGA) and head of the Employee Benefits Group. Mr. Nadeau counsels his department to develop and redesign employee benefits programs to match the corporate philosophy, long-term needs and objectives of their clients. He is also an industry leader on Healthcare reform and the cost impact and administrative burden on employers.

617.646.0351 | CNadeau@wgains.com | Follow Chris @Chris_Nadeau
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Egypt unrest emphasizes need to analyze political risks

The political protests in Egypt have shut down internet and other communications systems.  Business has been interrupted both locally on the ground and for companies that do business with Egyptian customers.   Travel companies have been unable to confirm local conditions and they have had to cancel tours.  Importers have been unable to confirm letters of credit and other essential information that allows for the flow of goods from Egypt.  Companies with manufacturing and distribution facilities are concerned about acts of vandalism amid the rioting.

Most of the financial losses that may result from these events are not insured by most companies.  Business interruption from the shutdown of internet services or other financial services might only be insured via political risk insurance, something that is not purchased by most businesses.  Actual acts of vandalism would be an exception.  There may be coverage depending upon the nature of local coverage and the impact of any global DIC (Difference in Conditions) coverage.

The possible contagion of political unrest from Tunisia to Egypt to other countries has businesses reconsidering their prior decisions to self-insure these risks.

(Image via: REUTERS/Goran Tomasevic)

 

What a Tufts Harvard Pilgrim merger could mean

Last evening it was revealed that Harvard Pilgrim Healthcare and Tufts Health Plan, the number two and number three health plans in Massachusetts, are in serious merger conversations. The merger of Harvard with 1 million total members and Tufts with approximately 750,000 total members, would significantly change the health insurance landscape in Massachusetts and would be created primarily to compete with Blue Cross and Blue Shield of Massachusetts, the state’s largest health insurer with over 3 million members.

Unlike typical corporate mergers where consumers may benefit from the consolidation of administrative components of the new combined entity, customers should expect little in the way of fixed costs savings given that both organizations operate today at about a 10% total administrative expense, quite low for this type of industry as compared to their for profit competitors. However the merger of these two organizations will provide much more leverage with providers

Could the use of social media be considered “off-label” promotion?

Thanks to the explosion of social media networks like Twitter and Facebook, drug and medical device companies now have a direct link to users of their products.  Although the U.S. Food and Drug Administration (FDA) addresses legal and regulatory issues associated with off-label promotion medical devices and drugs, it has only recently directed enforcement towards companies that who are utilizing these new mediums to promote their products.

Many Product Liability policy forms contain an exclusion for loss arising out of the dissemination of information in violation of any law, regulation or order of any governmental authority. It will be interesting to see how insurers will address social media and if they will consider using these new mediums a form of off-label promotion. Ropes & Gray LLP will host a webinar tomorrow on the regulatory challenges posed by social networking and online media tools, to explore FDA’s approach to enforcement in this area and provide practical advice for companies to consider when developing their compliance strategies. Check it out “Using Social Media Outlets for Drug Promotion“.

Healthcare Reform to be repealed?

Originally scheduled for January 12th, but now delayed due to the tragic events in Tucson, the new Republican-controlled House of Representatives will soon vote to repeal the new Healthcare Reform law. With the Senate – and the Presidency – still under Democratic control, this politically charged vote will most likely pass, but ultimately will be viewed as little more than the GOP keeping their mid-term election campaign promise to “repeal and replace”. The Republicans will, however, begin the fight over the funding of the healthcare program and their defunding efforts may have the effect of delaying or watering down key aspects of the law.

With their new found power, it is now incumbent on the Republicans to put forward their vision of healthcare reform which generally consists of fostering increased competition and choice. And as expected, the Obama administration has already begun to develop a counter-strike strategy, directing the Department of Health and Human Services to prepare a detailed outline of national and state-by-state repercussions if repeal succeeds.

While the specter of another partisan round of politics on health care should discourage us all, it’s unlikely that compromises will be quickly reached. As a result, the law will be in a fluid state over the coming years and employers and individuals alike will be in continuous need of guidance and advice.

Workplace discrimination filings hit new record

The United States Equal Employment Opportunity Commission announced today that private sector workplace discrimination charge filings hit a new record in their most recent year ended September 30, 2010. According to the EEOC: “The FY 2010 data show that the EEOC filed 250 lawsuits, resolved 285 lawsuits, and resolved 104,999 private sector charges. Through its combined enforcement, mediation and litigation programs, the EEOC secured more than $404 million in monetary benefits from employers — the highest level of monetary relief ever obtained by the Commission through the administrative process — to promote inclusive and discrimination-free workplaces.” Click here for the full press release.

This activity against employers suggests that the underwriting and premium terms for Employment Practices Liability Insurance will feel pressure in the coming year. Major underwriters of this coverage include Chubb, Chartis, Zurich, ACE and Travelers.

Taking aim at Medicare fraud with ZPIC audits

In an era of budget deficits and difficult economic times for health care providers, the call to eliminate fraud and abuse is constant. So much so that it sometimes seems loose its real meaning. Over the past year, the Centers for Medicare and Medicaid Services (CMS) has started using their latest tool in their ongoing fight against fraud and abuse, the ZPIC audit.

The audit program, called the Zone Program Integrity Contractors Audit, is armed with much more data and has a greater focus than audits that many providers are used to seeing from CMS. Published reports have indicated that these ZPIC audits “can be the most concerning”, according to Mark Higley, vice president of development for VGM Group, Waterloo, Iowa.

A report on the rise of sinkhole claims in Florida

Insurers in Florida are requesting rate hikes, even though the state hasn’t seen a hurricane in more than five years, in part because of an increase in claims for sinkholes and other damage.

Homeowners insurance claims filing in Florida for damage caused by sinkholes have nearly quadrupled between 2006 and 2010 statewide, according to a report from the Senate Banking and Insurance Committee issued this week.

A survey of 211 private insurers by the Office of Insurance Regulation found that sinkhole claims increased from 2,360 in 2006 to 6,694 in 2010, at a total cost of $1.4 billion. State-run Citizens Property Insurance paid about $84 million for sinkhole claims in 2009 but only collected $19.6 million in sinkhole premiums.

Advice for self-insured health plans: Don’t buy stop-loss on price alone

The Patient Protection and Affordable Care Act is making self-insurance more feasible as some of the additional costs required by insurers to comply seem excessive at 2-4% of insured premium. Self-insurance is seen as a means to reduce costs when insured loss ratios have consistently been low (typically less than 80%). Insurers continue to deem smaller and smaller groups 100% credible, so when claims are the primary driver of premiums, it makes sense to evaluate self-insurance.

For employers who choose to self-insure, they must evaluate who will process their claims and, in most cases, who will provide stop-loss reinsurance protection. Unfortunately, too many employers (and their advisors) view stop-loss protection simply as a commodity and that all policies are the same. Buying based on the lowest price without getting all the details, or taking info consideration the next renewal can be costly. I share with you some cases that illustrate my point:

A word to the wise when writing online

The internet provides a wealth of opportunity to access endless amounts of information as well as instantaneously express our thoughts and opinions. It is really quite exciting and offers endless possibilities to broadcast items to a large audience with relative ease. Unfortunately as with all opportunities and new vistas, there are some risks. The power to express yourself via a blog or on Yelp comes with potentially negative consequences. Blogs and chat room postings that are negative, even if truthful, can prompt legal action against the author.  Although the First Amendment does guarantee Free Speech, it does have some implied responsibilities in that its use should be for the benefit of the greater good. With that understanding, here are some risk management tips to consider before blogging