Insurance Trade Group Sues Michigan Over Medical Claims Assessment

The Self-Insurance Institute of America Inc. has sued Michigan's governor and insurance director seeking a declaration that the state's Health Insurance Claims Assessment Act of 2011 is pre-empted by the federal Employee Retirement Income Security Act.

The new Michigan law creates a 1% medical claims assessment, effective Jan. 1, 2012, on carriers who pay claims for medical services to a Michigan resident. It defines carriers as employers and third-party administrators, according to the complaint filed in the U.S. District Court for the Eastern District of Michigan. Named defendants are Michigan Gov. Rick Snyder, R. Kevin Clinton, director of Michigan'sOffice of Financial and Insurance Regulation and Michigan Treasurer Andrew Dillon.

The SIAA seeks a declaration that the Michigan act is pre-empted by ERISA and an injunction to prevent its implementation.

The SIAA is a trade association whose members include employers, plan sponsors, plan administrators and third-party administrators who will be assessed and regulated by the Michigan law. It includes members who function as a fiduciary under ERISA with respect to processing and paying medical claims.

The state "threw the net out as broadly as possible to bring in all possible payers of health claims," Mike Ferguson, chief operating officer of SIAA, told Best's News Service. The SIAA does not want enforcement of the new Michigan law relative to self-insured plans, he said.

The medical claims assessment would apply to medical stop-loss insurers, Ferguson said. Aside from SIAA's ERISA pre-emption argument, the SIAA argues that stop loss insurers "are not health insurance carriers and do not pay health insurance claims and therefore do not pay claims as defined by the Michigan statute."

Ferguson said he doesn't know of any other states that have imposed such assessments. "We heard that some states are looking at new ways to raise revenue, which may include the approach taken by Michigan."

The act applies to "every carrier and third-party administrator" that pays a "claim" on behalf of a Michigan resident for services provided, the complaint says.

A spokesman for the Michigan OFIR referred comment to Snyder's office, which didn't return a phone call seeking comment.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])