H.R. 2830: Making Sure the Insurance Companies Get Paid First

There is a long tradition in the American legislative process called “pork barrel spending,” or “piggybacking.” The basic idea is that a legislator will sneak a provision for spending or legal changes into a bill that is likely to pass. For the most part, these last minute insertions are completely unrelated to the main issue of the legislation. If these insertions are attached to legislation that is particularly popular, the new provisions have a better chance of getting through. The money for the “bridge to nowhere” is a perfect example of pork barrel tactics.

Another long-standing tradition in Washington, D.C. is called “Double Speak Legislation.” Taken from George Orwell’s book 1984, which features oxymoronic terms like “Slavery is Freedom” and “Ignorance is Strength,” “Double Speak” is used to describe legislation that has a title that implies the exact opposite of what the legislation actually does. For instance, the “Clear Skies” initiative actually made life easier for industrial polluters, while the “Healthy Forests” initiative allowed for increased logging activity in formerly protected forests.

The latest attempt at stealth legislation and double speak is the recently passed H.R. 2830, called “The Pension Protection Act.” Its stated goal is to “To amend the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 to reform the pension funding rules, and for other purposes.” (Italics our own.) The Senate passed its own version, S. 1783. This legislation is currently in conference, so the differences between the two versions can be ironed out before it becomes law.

ERISA is administered by the Department of Labor, the IRS, and the Pension Benefit Guaranty Corporation. Its purpose is to make sure that any private pension or benefits package conforms to some important standards, like making sure that pension recipients are properly informed of their options, and that the people in charge of your pension plan and benefits package are behaving responsibly with your retirement money. ERISA also establishes standards for health care packages, and makes sure that they are administered properly.

So what exactly needed to be amended in ERISA? What were these “other purposes” they were talking about?

The Senate Bill offers liability protection for ERISA participants that made a good faith effort to have qualified people take care of the pension fund. In other words, if the broker handling your retirement funds makes some bad decisions and leaves you with nothing, you can’t do anything about it. So the “pension protection” actually protects stock brokers. If your pension evaporates overnight, you have no recourse at all.

The House Bill offers pension relief for the airline industry. So that means that taxpayers can foot the bill for the pensions of pilots, baggage handlers, mechanics, ticket agents and flight attendants Again, this isn’t “pension protection” as much as it is “pension manager protection” and “big business profit protection.”

With the “double speak” principle firmly established, the question turns to the “pork barrel” principle. And if you look at Section 307 of the House bill, you will find an amendment that was snuck in just before the bill was brought to the floor for voting. There was no time for discussion of the matter. Section 307 was a textbook definition of “stealth legislation,” and its purpose was to make life easier for insurance companies at the expense of the injured.

A key standard of ERISA-sponsored health plans is that it prevents the insurance provider from engaging in subrogation (or, recouping of expenses) against someone who receives a settlement from a third party. In other words, if an ERISA-sponsored driver gets into a catastrophic car wreck that wasn’t his fault, and he sues the other driver and receives a settlement, ERISA can’t take all the money they spent on medical expenses out of the settlement. This is actually an important point. What if the other driver only has $50,000 worth of insurance and the medical bills for your accident were $100,000? What if you needed that money for future medical expenses, or to handle overdue bills because you couldn’t work while you were injured?

This brings us to section 307 of the “Pension Protection Act.” The language of this section allows for the immediate and complete reimbursement of any medical expenses from any settlements, and it makes these insurers the first priority in the event of a settlement. In other words, if a settlement is awarded, your ERISA insurer gets all of their expenses handled before you get to see a penny. If the settlement is for $50,000.01, and the medical bills are $50,000, you’ll get a check for a penny in the mail. If the medical bills turn out to be more than the settlement, then the insurer gets the entire settlement. You get nothing.

It’s impossible to guess what helping insurance companies avoid their financial obligations has to do with “pension protection.” Considering the record profits that insurance companies made in 2005, even with the destruction of Hurricane Katrina, it doesn’t seem like they need any extra help. So why would Congress piggyback another legislative perk for them into Federal Law, and why would they do so at the expense of their pension and benefits holders?

Right now, these two bills are in conference and are on their way to becoming law. Despite lobbyists and special interests that think otherwise, you still have a voice. H.R. 2830 is being pushed heavily by House Majority Leader John Boehner (R-OH.) If you are concerned about insurance company profits taking precedence over your well being, you should contact Mr. Boehner and tell him in no uncertain terms that legislation that can directly affect your life should not be slipped in surreptitiously, and that section 307 should be removed from this legislation immediately.