Ruth Marcott

As joyful as a birth can be, not every employee knows or remembers that a bouncing baby has to be added to the Plan to participate as a dependent in a medical insurance Plan. This is particularly true when the medical benefits Plan requires that the participating parents advise them within a specific number of days after a child was born or adopted before the child will be covered by the Plan.

Giving cigars and banners to co-workers is not enough. Most Plans have a requirement that a participant give written notification to the Plan that a child is born or adopted within 30 days of the birth or adoption. Assuming that notice is given, the child is covered from the date of birth. If the notice is not given, most Plans with which we work have a provision which says that the child cannot be covered until the next open enrollment period. This usually is the start of the next Plan Year.

This becomes a particular problem when the participating employee has left the company that provided the insurance and forgets to give the notice of the new dependent to the former employer and its medical insurance Plan. If that happens, you can forget about receiving reimbursement from the insurance coverage for the birth expenses.

In the case of Martin v. North Texas Health Care Network, an attorney who was employed by a county was covered by a self-insured medical plan provided by the county. Martin left his employment after 4 years and elected to continue medical coverage under COBRA through December 2000. On October 1, 2000, Martin's wife gave birth to twins. Martin alleges that he called the insurance company and gave notice of the birth of his twins, but had no written or oral proof of giving this notice.

Unfortunately, Martin said that a representative of the insurance company told him that no additional documents were required to add the twins to the insurance. Under the terms of that Plan, Martin was required to provide written notification of the birth of his children within 31 days after the birth. Assuming that notice was filed, coverage begins on the date of birth. Otherwise, the children in the Plan cannot be added until the next annual enrollment period.

Martin never proved at trial that he filed the requisite notice with the insurer. As a result, the Plan denied the $31,000 worth of medical bills that Martin eventually submitted to the insurer.

Martin sued his former employer on the grounds that denying coverage was:

1. A violation of his due process
2. A breach of his contract with his former employer
3. Violated a variety of tort claims – promissory estoppel, negligent misrepresentation, breach of good faith and fair dealing
4. A deceptive insurance practice

Martin lost on all claims. As sympathetic as Martin's situation was, the Court held that the medical Plan required that notice be given within 31 days after birth for the child in order to be covered from the date of birth. Having failed to prove that he gave that notice, Martin lost.

This simple if painful lesson is that any time a participant is adding a child or other dependent, the participant must read the Plan and follow the notice provisions if they expect medical claims for the child or dependent to be covered. If a participant fails to do that, you can expect to kiss that insurance reimbursement goodbye.

If you have any questions, contact Ruth Marcott of our Minneapolis Office.