In the ever-evolving landscape of COVID-19 regulations, Texas has taken a unique stance with Senate Bill 7, which was signed into law by Texas Governor Greg Abbott on November 10, 2023. This legislation specifically addresses COVID-19 vaccination mandates in the private sector, introducing a series of measures aimed at protecting employees’ rights while balancing public health concerns.
When the same health plan administrator both administers a benefit plan and pays the benefits due under the plan, it is considered by courts to have a structural conflict of interest. That conflict of interest is not problematic on its own – it is perfectly legal, and it is not a breach of fiduciary duty. However, when a plan member files a lawsuit challenging the administrator’s denial of the member’s benefits, a court can consider the conflict of interest as a factor in whether the administrator’s denial was arbitrary and capricious.
Over the last several years, courts have provided administrators and their attorneys with guidance on how to limit the impact of this common structural conflict of interest. When defending against denial of benefits claims under ERISA, 29 U.S.C. § 1132(a)(1)(B), defendant plan administrators should be aware of whether the conflict of interest exists and address it proactively to avoid negative inferences.
On November 6, 2023, the Office of Inspector General (“OIG”) issued its long-awaited General Compliance Program Guidance (“Guidance”) “to help advance the industry’s voluntary compliance efforts in preventing fraud, waste, and abuse in the health care system.” Although the Guidance is nonbinding, it reflects the OIG’s expectation that compliance programs become increasingly sophisticated in their approach to identifying and managing compliance risks as healthcare delivery and payment models continue to evolve.