Democrats Object To Health Insurance Provision in Pension Bill

By Staff Report

Jun. 11, 2006

Democrats are objecting to language in the House pension reform bill that they say would allow insurance companies to take a cut of lawsuit awards before the injured victim receives money.

Although the pension reform conference committee commenced its work in early March, Democrats says they’ve just learned of the insurance facet. The disagreement could complicate the already protracted wrangling over the pension reform bill.

“This provision is a special interest fix that was slipped into the House bill at the last minute without public hearing or debate,” says Sen. Edward Kennedy, D-Massachusetts and ranking member of the Senate Health, Education, Labor and Pensions Committee. “This is an indication of greed that is not entirely unexpected in this conference but should not be tolerated.”

Rep. Rob Andrews, D-New Jersey, says the measure would override laws in many states that require the weakest claimant to be paid first. He says changing such rules would deny victims the money they need to cover medical bills.

Andrews, a conferee, asserts that the measure is not germane to a pension bill. “This is a question of insurance law and health care law,” he says. “It should never have been in there in the first place.”

Proponents of the House language argue that the intent is to clarify existing law that allows a plan sponsor to be reimbursed for payment of medical expenses after a victim recovers damages from a negligent third party.

Recently, the Supreme Court ruled that a company has a right to such recovery as long as the funds are in the possession of the victim.

If a sponsor can’t get its money back, the participant would receive double payment, potentially leading to an increase in health insurance premiums, according to advocates of reimbursement. If the money is returned to the insurer, it can be restored to the plan and lower premiums.

On June 8, both House Majority Leader John Boehner and Senate Majority Leader Bill Frist called for the pension conference to conclude by the July 4 congressional recess.

Mark Schoeff Jr.

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