Ex-Gratis Payments of Claims
This just came up today and inspired a reminder note. When paying a claim that is outside the Plan Document or one that is excluded by the stop loss policy, always include a cover letter with the check that says something to effect of: “this claim is not payable under the [Plan document/stop loss policy] but, based on our longstanding business relationship and the unique circumstances of this case, we are paying it as an exception.”
This, of course, is a best practice designed to provide protection down the road when similar claims are presented for payment and there is no business or other reason to pay them. Usually plaintiffs ask for all denials in the last X years. The proper response is that no such claims are material to the instant action, but courts often will permit some limited discovery of this type, usually confining the discovery request to all claims presented with similar legal or factual issues. Without the “exception” language in the cover letter, producing these can be poison. The carrier has no legal obligation to be consistent, but it helps to have a record of why the claim was paid, and to characterize it as outside the carrier’s normal practice.