claim responsibility

[ksharrington]

Hello. I am posting this message on behalf on several employees (who live in Maryland), myself included, of a company called NETtel, which was based in Washington, DC, until its recent filing of Chapter 7 bankruptcy.

NETtel provided employees with a health insurance policy from Guardian, which apparently was a self-funded policy. As a result of the Chapter 7 filing, Guardian says they have terminated all benefits as of 11/1/00, with no COBRA or individual coverage options. There is still a great deal of discrepancy between what NETtel's trustees and Guardian are saying in relation to the COBRA coverage, and whether or not it does exist. Most of us have continued on to other avenues of health insurance, either temporary individual coverage, or a new employer's plan.

Our biggest concern in regards to this disaster is the claims that were made prior to the Chapter 7 filing and the termination of benefits. Several people are now being presented with hospital bills for services rendered during the period in which the health insurance coverage was active. Who is responsible for covering these claims? There are no issues regarding the validity of the claims. Employees paid their costs, coverage existed, and the claims were valid. Does the responsibility for these claims lay with NETtel, with Guardian, or with the individual?

Any insight or advice that could be offered would be most appreciated. Thank you!

 

[admin300]

It may depend on whether NetTEL hired Guardian essentially as a claims processor and did not actually have insurance, except perhaps, stop-loss, or bought insurance from Guardian but did not pay the bill. But COBRA does not apply unless the company remains in business -- it is something you may want to write to your congress people about as the law should be changed to give employees of failing companies COBRA-like rights at perhaps 5% above the privece the employer would otherwise have been charged.

Most of this is going to be eventually worked out in the Bankruptcy Court, and the employees should seek to protect their interests and get represented by one firm of attorneys.

I am sorry but I am not up on the latest application of the state laws and ERISA on how all this shakes out. Many states give priority to claims of employees in bankruptcy. Best of luck --