US Labor Department reaches settlement with Sierra Pacific Industries’ Health Benefits Plan

WASHINGTON – Fiduciaries of a health plan covering employees of a major western lumber producer have agreed to settle claims that they did not comply with the Affordable Care Act and the Employee Retirement Income Security Act when providing healthcare benefits and deciding worker claims for healthcare benefits.

After an investigation by the department’s Employee Benefits Security Administration, the Sierra Pacific Industries Health Benefits Plan has agreed to comply with the ACA and ERISA, to pay past benefit claims in compliance with the ACA, and to correct the way it makes decisions on future claims.

“The Affordable Care Act put into place standards and protections for workers covered by employee benefit plans. The Sierra Pacific plan was operating as though it was exempt from such requirements, when indeed, it was not.” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “This settlement means that workers improperly denied health benefits will have their claims paid. Corrections made to plan procedures will also mean that all future claims are processed and paid properly.”

The EBSA investigation found problems with certain aspects of the plan’s claims processing, with the clarity of plan documents, and with the application of certain plan procedures for deciding claims. The agency’s investigators also found that the plan was not a “grandfathered” plan, was not exempt from certain ACA requirements and was required to comply with the law. Specifically, the department found that as of Jan. 1, 2013, the plan relinquished its grandfathered status because changes were made to the plan that precluded it from meeting the regulatory exceptions that would allow it to retain grandfathered status.

As a result of the investigation and subsequent negotiations with the department, the plan fiduciaries have agreed to comply with the ACA’s requirements for plans that are not grandfathered, including requirements for internal claims and appeals and coverage of preventive health services. They have agreed to:

• Revise plan documents and internal procedures.
• Re-adjudicate past claims for preventive services, out-of-network emergency services, claims affected by an annual limit and pay claims in compliance with the ACA and ERISA.
• Submit to an independent review organization claims were eligible for external review.
• Pay claims that had been left on hold for a long time.
• Comply with timelines for deciding claims as provided in the department’s claim regulation.
• Forego – for the 2017 plan year – any increases to participant premiums, annual out-of-pocket limits, annual deductibles and coinsurance percentages in effect for the 2016 plan year. 

Sierra Pacific owns and manages timberland in California and Washington, and is among the largest lumber producers in the U.S. The company manufactures lumber primarily, but also produces items such as wood windows, millwork components and telephone poles. It also provides trucking operations to fit its business needs and generates electricity which it sells to utility companies. It has more than 4,400 employees.

EBSA’s San Francisco Office investigated the case, and the department’s Office of the Solicitor, Plan Benefits Security Division in Washington negotiated the settlement. Workers or employers with questions or concerns about healthcare, retirement, or other benefit plans can contact the Employee Benefits Security Administration toll free at 866-444-3272 or https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa.