OPM's claims rules: `dumb and dumber'

Remember the dumb interim rules the Office of Personnel Management issued last year regarding resolution of disputes over health insurance claims? Well, OPM has finalized those rules and made them even dumber.

To recap, in 1995 OPM issued interim regulations that said that if a federal worker was unhappy with the way his or her insurance plan handled a claim, the employee had to sue OPM, not the Federal Employees Health Benefits Program (FEHBP) carrier. Earlier this month OPM finalized these regulations with some onerous caveats.

OPM has put a limit on requests for reconsideration, giving feds just six months from a denial to formally request another look. Previously, feds had up to a year to put in such a request. OPM's new regs do allow a little wiggle room, providing a one-year window for a reconsideration request if you can prove you could not meet the six-month deadline.

OPM said it had received comments from individual feds taking issue with these new regs. Those opposing them said the new regulations adversely affect a fed's rights to seek satisfaction in state courts, ask for monetary compensation for damages, use provisions of state laws that require insurers to prove they gave proper notice concerning a change in benefits and to write contracts clearly, go to court without seeking OPM review and present evidence that OPM did not have, and seek an expedited court ruling when health or life is at risk.

OPM dismissed each one of these complaints in its usual cavalier fashion by explaining that its regs never offered such "rights" to feds. OPM then goes on to say that its regulations clarify that the "opportunities" listed above are just not available to feds under the FEHBP.

OPM says the FEHBP law clearly states that contract provisions covering feds' benefits supersede and pre-empt any state law covering health insurance plans. That's a valid response to the contention that OPM's regs impede a fed's access to state courts but does not address other complaints, such as the right to seek monetary compensation or the right to go to court without first getting an OK from OPM.

These new regs leave feds with little room for maneuvering if they are unhappy with the resolution of a claim filed with a health insurance carrier under the FEHBP.

The fed must first exhaust all available remedies with the carrier. If the fed is still not satisfied, then OPM has to review the claim.

If that doesn't yield satisfactory results, the employee can then take OPM to court (but not the health insurance carrier). As mentioned in an earlier column, I believe OPM's motivation for doing this is to reduce the costs of litigation to health insurance carriers so they can offer the lowest insurance premiums to federal workers.

For this, OPM should be commended. But requiring feds to sue OPM rather than the carrier gives the health insurance firms too much leeway. As a practical matter, health insurance carriers know that not many feds will take a case all the way to the courts.

These new regs all but eliminate litigation. Consequently, the health insurance company can turn down a request for reconsideration and hope that either the employee drops the case or appeals to OPM, which can either side with the fed or the carrier.

If OPM sides with the fed, the carrier has ducked the costs associated with the dispute-resolution process. If OPM sides with the carrier, the carrier is off the hook. In nine out of 10 cases, the fed will probably not take OPM to court because he doesn't have the financial resources of the government.

This is a bad decision by OPM. I predict that someone is going to challenge the legality of these regulations, which ultimately will be found in violation of the Constitution. People have the right to seek redress in the courts if they have been wronged by a particular party. Until the inevitable court challenge, try to work things out with your health insurance carrier if you are unhappy with one or more of its decisions.

**

Bureaucratus is a retired federal employee who is a regular contributor to FCW and the author of Bureaucratus Moneyline, a personal finance newsletter for federal employees, available by subscription on FCW's Web page at http://www.fcw.com. For more information, contact Bureaucratus at bureaucratus@fcw.com.

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