Adult daughter required to submit insurance claims through her father and consent to disclose personal information to her father upon claiming benefits from his private health insurance plan

PIPEDA Report of Findings # 2013-012

Issues:

A young adult woman, who was a student, was listed as a dependent on her father’s private group health insurance plan. The plan was 100% funded by his employer (the plan sponsor).

The woman objected to the plan administrator’s policy of not accepting benefit claims directly from dependents. In the complainant’s case, she was required to submit all her claims through her father, the plan member, who thus became privy to her personal health information. The complainant also objected to the fact that, as her father’s dependent under his plan, the plan administrator required her consent for sharing her personal information with her father for various purposes related to her benefit claims.

She believed this was a denial of her privacy rights. She also asserted that others in her situation may ultimately choose to forego certain medical treatment out of concern that their parents would discover their confidential medical issues.

She informed our Office that upon withdrawing her consent, the administrator advised that it could no longer process her claims. Thereafter, she had no coverage under her father’s plan and began paying for her own personal medical expenses.

The woman complained to our Office that disclosing her personal information to her father was unnecessary to administer and process her benefit claims under his plan. She therefore challenged the requirement to give her consent for these disclosures as a condition of the supply of a product or service, as prohibited by Principle 4.3.3 of PIPEDA.

Analysis and Outcome:

For our Office’s analysis of the merits of the allegation, we contextualized the complainant’s allegation specifically within the structure her father’s health insurance plan, including the rights and responsibilities of plan members and their dependents.

Since plan members solely bear the full responsibility for all claims made under their membership, they alone are answerable to any errors, abuse or fraud stemming from these claims ─ whether they be for health services they receive or those received by their dependent(s). In other words, the father lacking knowledge about certain claims submitted under his plan could expose him to undesirable consequences ranging from the obligation to reimburse monies paid, the withdrawal of coverage by his employer, and even civil litigation or criminal prosecution.

We also noted that a dependent under the plan has none of the same overarching responsibilities as the member does to properly manage their participation in the plan. Further, the beneficiary status of dependents is entirely contingent on the rights of their plan member.

Viewed in the light of the plan member’s responsibilities under the Plan, we could not conclude that the plan administrator’s requirement that dependents consent to the disclosure of their personal information to plan members went beyond what was required to process claims.

For these reasons, we found that the complainant’s allegation, i.e., that Principle 4.3.3 was being contravened, was not well-founded.

Other Considerations:

Our Office recognizes that the disclosure of personal medical information of dependents of group plan members, arising from the claims process, remains a sensitive privacy issue with wider implications beyond the particular practices of the plan administrator in this case (i.e., implications such as the health care of young adults). Our Office therefore seeks to encourage, and participate in, dialogue with group insurance companies, plan administrators and other interested stakeholders with a view to develop a greater understanding of this issue and examine the need for appropriate industry guidance and consumer education material.

Report of Findings

Complaint under the Personal Information Protection and Electronic Documents Act (“PIPEDA”)

Summary of complaint:

1. The complainant objects to an insurance company‘s^{Footnote 1} (the “respondent”) disclosures of her medical information to her father (the “plan member”) when she seeks reimbursement of medical expense claims through an extended health care plan (the “Plan”) provided by her father’s employer (the “employer”).
2. The complainant is eligible for coverage under the Plan as a dependent of her father. The respondent requires that all claims be made through her father and that the complainant consent to the disclosure of her claims information to her father for the purpose of processing and paying the claims.
3. In October 2011, the complainant requested that the respondent allow her to submit a claim to them directly. She states that the respondent refused the request.
4. At the same time, she sought to withdraw her consent allowing the respondent to disclose her personal medical information to her father. The respondent notified the complainant that by withdrawing her consent it would not be able process any of her future medical expense claims submitted under the Plan.
5. The complainant alleges that the respondent’s position constitutes the imposition of an unacceptable condition of service. It requires her to accept the disclosure of personal information to her father which is unnecessary to administer and process her medical expense claims as a dependent.

Summary of investigation:

The complainant’s position

6. The complainant is a student at a post-secondary educational institution.
7. In her original complaint to the respondent in October 2011 and her subsequent complaint to this Office, the complainant asserted that, as a student^{Footnote 2} dependent under the Plan, the respondent should allow her to file medical expense claims directly.
8. She further asserted that upon adjudicating her claim the respondent should withhold information about the claim from her father, a member of the Plan, and send any subsequent reimbursement payment directly to her without notifying her father.
9. The complainant argued that many post-secondary students over the age of majority are covered as dependents under the group health care plans of their parents’ employers. These students should be afforded confidentiality in respect of their personal medical information when submitting medical expense claims.
10. The complainant claimed that to deny dependents confidentiality regarding their medical information is to deny them their fundamental privacy rights. The complainant believed that sharing dependents’ medical information with plan members could lead to some overage dependents choosing to forego medical treatment or services out of concern that their parents would be informed.
11. Following a response by the respondent in October 2011, the complainant indicated that she remained in disagreement with the respondent’s policy of disclosing dependents’ medical information to plan members during the claims process, on both privacy and ethical grounds.
12. The complainant suggested that once a plan member elects to cover the medical expenses incurred by a dependent, the respondent should deal directly with the dependent for the purposes of claims submissions, adjudication and notification. If required, the respondent should enter into a direct legal relationship with dependents to ensure their cooperation in the event of a claims audit or investigation.
13. To support her position, the complainant pointed to the claims handling and confidentiality practices of another third-party group benefits administrator (the “third-party administrator”). The complainant explained that this administrator allowed overage dependents of another extended health care plan to submit medical expense claims directly, rather than through that plan’s members.
14. The complainant also referred to OPC Settled Case Summary #2010-001: Dental benefit information available to parents with daughter’s consent.^{Footnote 3}
15. In that case, a third-party group benefits administrator provided dependents of a group health and dental plan with separate accounts on its claims system. The third-party administrator denied the parents of a 17 year old access to their daughter’s online dental benefit information, even though they were the paying plan members of their employer’s group dental plan and their daughter was a covered dependent under the plan. The case was considered settled when the daughter’s mother accepted the administrator’s explanation that it could not provide access to her daughter’s information without the daughter’s informed consent.

Scope of our investigation

16. During our investigation, we examined the structure of the Plan and its administration model, paying particular attention to the claims process.
17. We also reviewed wider industry practice with regard to the processing of group insurance claims. We contacted the main trade association, the Canadian Life and Health Insurance Association (“CLHIA”), the Financial Services Commission of Ontario (“FSCO”) and reviewed the claims forms and websites of several group insurers and plan administrators.
18. We contacted the third-party administrator referred to by the complainant to discuss its allegedly different claims-handling process.

The Plan

General

19. The employer is the Canadian division of an international private-sector organization with operations and employees located throughout Canada.
20. The employer has established group benefit plans that provide a range of health care, dental, disability, life insurance and other benefits to its employees.
21. Employees can choose to enrol in the employer’s extended health care and dental plan, paying premiums based on the level of coverage chosen and the number of dependents they wish to cover.
22. The complainant’s father is a participating plan member.

Administration of the Plan

23. The Plan is self-invested, which means that the employer meets the cost of administering and paying claims through its own funds. In other words, the employer bears all of the financial risks associated with the Plan.
24. On January 1, 2011, the employer appointed the respondent to act as the third-party administrator of the Plan under an “Administrative Services Only” (“ASO”) agreement. The ASO agreement provides that the insurance company acts at all times on behalf of the employer and is not considered an insurer of the Plan.
25. Pursuant to the ASO agreement, the respondent adjudicates and pays claims for eligible medical and dental expenses submitted by plan members, responds to member inquiries about the claims process and specific claims and manages the Plan’s drug card.

The complainant’s coverage under the Plan

26. Prior to submitting the complaint, the complainant’s father elected to cover the complainant under the Plan as a dependent.
27. Since the withdrawal of her consent to the disclosure of claims-related medical information to her father, the complainant has been funding her personal medical expenses at her own cost.

The claims process – submissions and adjudication

28. The respondent requires that all claims under the Plan, including for expenses incurred by dependents, be authorized and submitted by the plan member to the respondent for adjudication.
29. The complainant was therefore, consistently required to submit earlier medical expense claims to the Plan through her father, the plan member.
30. The respondent described the three methods by which a plan member can submit medical expense claims under the Plan: (i) an extended heath care claim form (the “claim form”); (ii) via the online e-claims system; and (iii) through use of a pay-direct drug card.

The Claim Form

31. The respondent provided us with a copy of its current claim form used by plan members submitting claims through the mail.
32. When completing the form, plan members must provide the following:
    1. Information about themselves: their contract number, member ID number, employer’s name, their name, gender, date of birth and address;
    2. Information about other benefit plan coverage (if the plan member, spouse or other dependent that is the subject of a claim has similar coverage under another health care plan, the “coordination” of such benefits coverage is required to ensure appropriate reimbursement);
    3. Information about the claim: the name of the person who incurred the expense, their date of birth, their relationship to the member, whether they are a full-time student or disabled, the amount being claimed, whether the claim is for out-of–country expenses, related to a work injury or a motor vehicle accident.
33. The respondent referred us to the signature and authorization section of its claim form.
34. Plan members sign the claim form certifying that the goods and services claimed have been received by the plan member and/or his or her spouse or dependents, that the information contained in the form is true and complete and does not contain a claim for an expense already paid.
35. In the section, plan members further attest that if the claim is being made on behalf of a spouse and/or dependents, the member is authorized to disclose information about them, for the purposes of administration, underwriting and the adjudication of claims. The member must confirm that their spouse and/or dependents authorize the respondent to disclose information about their claims to the member for the purposes of assessing and paying a benefit and managing the member’s group benefits plan.
36. The plan member then submits the claim form to the respondent for adjudication, along with the original medical expense receipts.
37. The level of detail contained in such receipts will typically vary with the nature of the treatment, service or product provided. For example, the content of prescription drug receipts issued by pharmacists include information on the prescribing physician, the dispensing pharmacist, the drug dispensed, the drug dosage and frequency to be taken and the drug information number.

Online e-claims

38. The respondent has a member services website (the “website”). Members of employer group benefit plans administered by the respondent can access the website through a simple registration process. Spouses and dependents are not provided with their own access to the website.
39. The website allows plan members to obtain details of the coverage provided by their employer’s plan, print personalized claim forms, submit medical expense claims for themselves, spouses and dependents online, view claim statements, and review their claims history and that of their spouses and dependents.
40. Plan members can, by accessing the website using their unique access ID and password, select the type of claim they wish to submit.
41. As part of the online claim process, plan members are asked to certify that all goods and services being claimed have been received by them or their dependents. If the claim is being made on behalf of a spouse and/or dependents, the member confirms that the member is authorized to disclose information about the spouse and/or dependents, and confirm that the spouse and/or dependents have authorized the respondent to disclose information about their claims to the member, for the purposes of assessing and paying a benefit and managing the member’s group benefits plan.
42. Plan members are expected to retain medical expense receipts, including those of dependents, as the respondent audits claims submitted electronically on a random basis.

Pay-direct drug card (“drug card”)

43. The Plan offers a drug card. Each drug card features the name of the plan member, the Plan contract number and the member’s ID number. In the event that a plan member requests drug cards for his or her dependents, the additional cards are issued in the plan member’s name and delivered to the member.
44. When a drug is obtained at a pharmacy and a drug card is presented by a plan member or a covered dependent, the drug information and expense is sent electronically to the respondent by the pharmacy for adjudication.
45. The wording on the back of the Plan’s drug card indicates that its user must agree to the respondent and its agents and service providers collecting, using or disclosing information about the user, their spouse or dependents to any person or organization, including the pharmacy, health care practitioners, institutions, investigative agencies and insurers, for the purposes of patient safety, paying claims, underwriting, administration and auditing. It also states that the dependent or spouse agrees that their information will be shared with the plan member.

Adjudication of claims

46. If a medical expense claim is for a dependent, the respondent will assess the dependent’s eligibility, review the receipts, input the expenses and then adjudicate the claim through its claims system, according to the Plan’s terms.

The claims process – member notification and payment

47. Following the acceptance of a claim, a benefits statement is prepared with details of how the claim was adjudicated. The respondent sends all benefit statements to the Plan’s members. Benefit statements and historical claim summaries can also be viewed on the website.
48. The summary shows a generic description of the expense incurred, who incurred the expense, the date(s) the service was provided, the amount claimed, the amounts ineligible and eligible for reimbursement and the actual amount paid to the plan member. Summaries do not list drug information numbers.
49. If the medical expenses are eligible for reimbursement, the respondent is required by the ASO agreement to issue payment directly to the plan member. With drug cards, the respondent reimburses the pharmacy directly for the covered drug expenses. Under the ASO agreement, the respondent has the right to recover overpayments of benefits to plan members.

The respondent’s position

50. The respondent maintained that only a plan member can elect, as part of the Plan, to request coverage for, and be reimbursed for, expenses incurred by his or her spouse or dependents. Plan members can also request termination of coverage for dependents.
51. The respondent stated that it does not have separate files for plan members’ spouses and dependents, as they are not eligible for direct membership of the Plan.
52. In the absence of her father’s employment with his employer, the complainant would have no expectations of coverage and, therefore, would have no independent right to claim benefits under the employer’s Plan.
53. Consistent with this position, all communication and information about the Plan flows between the employer, the respondent and the plan members. This is why all correspondence, including claims information, is directed to the complainant’s father.
54. When the complainant withdrew her consent to sharing her claims-related information with her father, the respondent argued that it became unable to process future medical expense claims for the complainant.
55. Withdrawal of consent by the complainant, would impact the father who, as plan member, is ultimately held responsible for managing the current records of his dependents under the Plan, managing annual and lifetime benefit plan maximums, authorizing claims submissions, accounting for drug cards issued in the member’s name, responding to claims audits and participating in investigations into potential fraudulent activity linked to the Plan.
56. In addition, in the event that a claim is paid in error, or is subsequently deemed unacceptable under the terms of the Plan, the respondent seeks reimbursement of the monies paid from the relevant plan member, not their dependent(s).
57. Therefore, according to the respondent, the continued processing of claims in the absence of consent from the complainant to the sharing of her information would prevent her father from effectively managing his participation in the Plan.
58. The respondent also stated that allowing dependents to file claims independently would require it to collect and retain much more personal information about dependents than it currently does. For instance, the respondent would have to collect dependents’ addresses and potentially their bank account information in order to process and pay out claims, information it does not currently maintain. It would also have to have enough information to verify the identity of a dependent should he or she wish to contact the respondent about their claim. In general, the respondent submitted that accepting claims from dependents – a much broader range of individuals than it currently accepts claims from – would have significant cost implications for its operations.

The employer

59. We discussed the Plan’s claims process and Plan-related communications material issued to employees with the employer, the plan sponsor.
60. The employer provided our Office with a copy of its booklet issued to all plan members. This gives plan members detailed information about the coverage provided under each of the employer’s group benefit plans and, for the extended health care and dental plan, details of the respondent’s claims process.
61. The employer confirmed that all Plan communications material is directed to its employees. It has not produced claims-related communications material specifically targeted at its employees’ dependents.

The third-party administrator

62. We spoke to the administrator identified by the complainant^{Footnote 4}, to discuss both its handling of medical expense claims and its protection of covered dependents’ personal medical information.
63. The administrator confirmed that it used to allow spouses and overage dependents of group health care and dental plans to submit medical expense claims and receipts directly. They could do this by sending in its standard health claim form by email or post, or using assigned drug cards.
64. The administrator clarified that claims submitted directly by dependents on its health claim form still had to be authorized and signed by plan members, as required by the declaration in the Form and each relevant plan’s terms.
65. Payments for claims submitted by spouses and overage dependents continued to be issued to plan members, as the administrator recognized that plan members carried ultimate responsibility for all the actions taken by their spouse or dependents under their respective plans.
66. The administrator stated that up until several years ago, it did not allow plan members online access to the claims information of their spouses or dependents over the age of 16. Separate access to its online claims system was granted to all individuals.
67. However, several years ago it ceased the practice and reverted to the process adopted by other group insurance companies and third-party administrators, i.e., the submission of claims could only be made by plan members.
68. The third-party administrator provided us with a copy of its current health claims form. Similar to all the other group benefit claims forms that we reviewed, the plan member is expected to provide information about his or her plan, information about the medical expenses claim, attach the expense receipts and sign the form.
69. The administrator’s online claims system still allows individuals, regardless of their status (plan member, spouse or dependent) to have their own online user name and password. However, all claims information is disclosed to the plan member. Spouses and overage dependents can view only details of their own claims.

The Canadian Life and Health Insurance Association (“CLHIA”)

70. We spoke to the CLHIA about the processing of group health claims and attendant disclosure of dependent medical information to plan members.
71. Without identifying the parties involved, we asked the CLHIA if the practice of dependent claims being submitted through plan members, and the subsequent issue of a benefits statement to plan members, was a consistent practice across its membership. The CLHIA confirmed that its understanding was that this was the case.
72. We asked if the CLHIA had issued any industry guidance regarding the administration of group plans. The CLHIA directed us to their Guideline G3 – Group Life and Group Health Insurance and Guideline G4 – Coordination of Benefits documents.
73. Neither of the Guidelines addressed the processing of claims. They did, however, set out certain obligations that CLHIA member companies have when dealing with plan members of group life and health insurance policies and sought to differentiate between the status of plan members and their dependents.

The Financial Services Commission of Ontario (“FSCO”)

74. We spoke to the FSCO to discover if they had issued regulations or guidance to Ontario registered insurance companies on the processing of group health and dental claims. The FSCO stated that it had not and referred us to the CLHIA.

Other group insurers and third-party administrators

75. Independent of the CLHIA and FSCO, we reviewed the group health and dental claim forms of several of the respondent’s competitors and examined information regarding their paper-based and e-claims processes.
76. We noticed that paper-based claims had to be submitted and signed by plan members.
77. Original receipts had to be attached to the claim forms submitted by plan members, including for claims where medical expenses were incurred by spouses and other dependents.
78. Similarly, e-claims for medical expenses incurred by dependents had to be submitted through plan members’ online accounts.

Application:

79. In making our determination on these matters, we applied Principle 4.3.3 of Schedule 1 of PIPEDA.
80. Principle 4.3.3 stipulates that an organization shall not, as a condition of supply of a product or service, require an individual to consent to the collection, use or disclosure of information beyond that required to fulfil the explicitly specified and legitimate purposes.

Findings:

Analysis

81. The complainant alleged that the respondent’s refusal to accept and process her direct claims submissions and block disclosure of her personal information to her father, the plan member, was an unacceptable condition of service and in contravention of Principle 4.3.3 of Schedule 1 of PIPEDA.
82. It is not disputed that the respondent requires dependents, such as the complainant, to consent to the disclosure of claims information to the plan member as part of the claims process. Dependents must provide information to plan members in order so that the plan member can submit a claim on their behalf. They must also provide their consent for the respondent to disclose their personal information to plan members for the purposes of processing and paying a claim and managing participation in the Plan. Among other things, the information in question can reveal what medical care a dependent has received and therefore can be highly sensitive.
83. In her complaint, the complainant sought to show that a third-party administrator had applied a different claims process than the respondent and allowed the direct submission of claims by covered spouses and dependents for other group plans.
84. Upon contacting the third-party administrator, we found out that its earlier approach still required the authorization of all spousal or dependent claims by their respective plan members. Furthermore, it stopped accepting such direct claims several years ago and reverted to the same practice as the respondent and other plan administrators.
85. Nevertheless, the fact that other plan administrators may also require disclosure of claims information to plan members is not determinative of the issue of whether the respondent’s practice is consistent with Principle 4.3.3.
86. With respect to the settled case summary referred to by the complainant, in that case the issue was a lack of consent for the disclosure of personal information. Unlike this complaint, it did not concern whether a requirement for dependents to consent to the disclosure of their information was acceptable under PIPEDA.
87. In our view, the issue raised by the complainant must be analyzed by looking at the structure of the Plan and the rights and responsibilities of plan members and their dependents under the Plan.
88. During our investigation, we identified that the Plan’s members have extensive responsibilities under the Plan. Amongst other things, plan members are held accountable for the following: confirming a spouse or dependent’s continued eligibility; informing the administrator of other coverage; managing compliance with the Plan’s benefit maximums; accounting for the use of drug cards; paying premiums; providing evidence of claims and paying any costs associated with proving a claim; authorizing claims submissions; cooperating with claims audits; and reimbursing claims payments found to be ineligible due to error, abuse or fraud.
89. This is not surprising given that it is only the plan member who has the direct legal relationship with the plan sponsor – in this case the employer. While a dependent may be a beneficiary under the Plan, their status under the Plan is entirely contingent on the plan member. All of the rights and responsibilities rest with the plan member.
90. Because of the Plan’s structure, processing claims submitted directly by dependents, as the complainant has requested, would be problematic. If the respondent were to process a direct claim from the complainant and then withheld information about the claim from the complainant’s father – the individual responsible for managing participation in the Plan – this would place the complainant’s father in a potentially difficult position.
91. The complainant’s father could be held accountable for claims errors, abuse and fraud under the Plan, without any foreknowledge of the claims, or any means of responding to, or refuting, such allegations. The consequences for the complainant’s father could be serious, ranging from the obligation to reimburse monies paid, the withdrawal of coverage by his employer and, in extreme circumstances, civil litigation or criminal prosecution.
92. Ultimately, while we are sympathetic to the complainant’s concerns that she is required to consent to the disclosure of sensitive medical information to her father in order to claim medical expenses under the Plan, in our view this flows from the structure of the Plan and the complainant’s status as a dependent.
93. Viewed in the light of the plan member’s responsibilities under the Plan – responsibilities a dependent does not have – we cannot conclude that the respondent’s requirement that dependents consent to the disclosure of their personal information to plan members goes beyond what is required in order for the respondent to process claims under the Plan.
94. For these reasons, we do not agree that the respondent is contravening Principle 4.3.3 of Schedule 1 of PIPEDA, as alleged.

Conclusion:

95. Accordingly, we find the complaint on the matter of consent is not well-founded.

Other:

96. Although we do not find that PIPEDA has been contravened in this matter, we would be remiss if we did not acknowledge that this complaint generated considerable reflection, given the highly sensitive nature of health information that is at the core of this issue.
97. Notwithstanding the conclusion, we recognize that the disclosure of personal medical information of dependents of group plan members, arising from the claims process, remains a sensitive privacy issue with an impact on the health care of young adults.
98. This is a policy and ethical issue that has wider implications beyond the specific claims and disclosure practices of the respondent. Indeed, it has implications for the entire group insurance industry, which must comply with provincial insurance legislation as well as applicable privacy laws.
99. Therefore, we strongly urge group insurance companies and plan administrators such as the respondent to enter into dialogue with other interested stakeholders: major plan sponsors, provincial regulators and consumer rights groups.
100. Stakeholders could re-examine what practices and measures can reasonably be adopted to limit the disclosure of dependent’s medical information, while preserving both plan members’ need to know what is happening in their name as group health care plan members, and the needs of insurers and plan administrators to combat abuse and fraud against such plans.
101. We believe that such a dialogue between stakeholders at this time would be helpful in developing a greater understanding of this privacy issue and in examining the need for appropriate industry guidance and consumer education material.
102. For our part, our Office will seek to encourage and participate in such dialogue. We will meet with the CLHIA and our provincial counterparts in the coming months to discuss this issue more fully.