On April 26, the Phoenix eparchy filed a suit claiming that an employee benefits company had wrongly started a self-insured health plan with funds from the eparchy, which believed it was paying premiums to secure insurance products for its employees, Danielle Smith reported at Law360.
“The Byzantine Catholic Eparchy of Phoenix said in its complaint that Aetna-owned Meritain Health Inc. and Ohio-based Employee Benefits Services Inc., or EBS, flouted their fiduciary duty under the Employee Retirement Income Security Act by using assets meant to pay insurance premiums for the eparchy's roughly 21 employees to pay for expenses and fees, among other things, instead,” Smith wrote.
Forgive me, an outsider, for some observations.
It seems from these two paragraphs that there is a misunderstanding about the nature of the benefit program that the eparchy entered. Rather than a program of commercial insurance, it appears to be a self-insured program that involves a number of Eastern Catholic eparchies. Self-insurance programs are not uncommon in business. Sometimes self-insuring can be less expensive in the long run, given the risk assessments made, than commercial insurance where other entities are added to the pool of participants--some of whom may have members with much greater risks than a given business entity and similar businesses.
Somehow the benefits manager may not have understood what was being purchased and therein may be the root of the problem.
The theory of insurance is that members are in a "pool" where we share risks. This year I may need to tap the pool and others may not. They share my burden. Likewise next year someone else may need help and I do not but share his/her burden. The same assumption is made whether the insurance is commercial or a self-insured pool.
In no way is an insurance premium, whether in a commercial policy or in a self-insured program, a savings account that accumulates for the benefit of the person or entity that has paid the premium. The premium is a gamble, if you will, for a given period. I bet that I will need lots of benefits and the company or the self-insured pool bets I won't. At the end of a given period, a new premium is needed. Seldom is there an accounting of what was paid out and what was retained. There is always some part built in for the person(s) who administer the plan, whether commercial or self-insured program.
I'm taking a wild guess--my own--that the trouble comes because the eparchy feels that it was defrauded in some way. Either it did not understand that the plan was not commercial or it somehow feels that being self-insured means that it is putting money away for itself alone. If the insurance company didn't tell it what kind of program this is, that may arise to fraud: the lawyers will sort that out. If it was suddenly switched form commercial to a self-insured pool without a transparent explanation--again something the lawyers must sort out.
However, if the eparchy received the coverage that they were expecting for its employees, it will be hard to find a claim for some sort of refund just because they felt that others benefited from their pooled premiums.