Insurance

Access by schools to families’ private health insurance benefits:

 

See OSEP Policy Letter to W. Cohen, 19 Individuals with Disabilities Education L. Rep. 278 (7/9/92). In another case, OSEP said that the district must follow certain steps as well, including obtaining parental consent and informing the parent of rights, which includes the potential loss of lifetime insurance benefits.  (OSEP 1992)  Letter to Spann, 20 IDELR 627. 

a)     A parent's use of insurance is voluntary. If the parents refuse to consent to use of insurance, special education services cannot be denied.

b)     Case on Use of Private Insurance to Pay Costs of FAPE. See the "rather cryptic regulation"  Seals v. Loftis, 614 F.Supp. 302 (E.D. Tenn. 1985), of the United States Department of Education concerning the relationship between the availability of private insurance and the requirement that a state (or, in Connecticut, a local educational authority) provide a free and appropriate public education (FAPE) under the Individuals with Disabilities Education Act (20 U.S.C. § 1400 (c)).  In Raymond S. v. Ramirez, 918 F. Supp. 1280 (N.D. Iowa, 1996), Judge Mark W. Bennett summarized the issue by saying, An administrative law judge determined that the child's insurance carrier, rather than an area education authority or the school district in which the disabled child attends school, should bear the costs of an independent educational evaluation of the child, which agency regulations implementing the IDEA state must, in certain conditions, be provided "at public expense."  The court therefore grapples with a question of first impression in this circuit, aided only by administrative rules and sparse judicial and administrative decisions from other circuits, as it seeks to determine what exactly "at public expense" means in this case. Id. at 1282.The case involved an independent educational evaluation performed by the University of Iowa, commissioned by the parents, most of the cost of which was paid by the parents insurance.  The amount paid by insurance reduced the amount of lifetime benefits available to plaintiff to $918,068.63.  The court looked to agency regulations (20 C.F.R. § 300.594 (a)(3)(ii)) which provided: (ii)  "Public expense" means that the public agency either pays for the full cost of the evaluation or ensures that the evaluation is otherwise provided at no cost to the parent, consistent with § 300.301. The regulation referred to, § 300.301, provides, in part, (b)  Nothing in this part relieves an insurer or similar third party from an otherwise valid obligation to provide or pay for services provided to a child with a disability. The court gave substantial deference to these regulations. The Board argued that the regulation did not require it to reimburse Plaintiff for the costs covered by insurance.   The court, however, concludes that such a holding would run counter to both the sparse case law on the subject, as well as the agency's own interpretation of its regulations. Id. at 1293. The court quoted at length from the December 1980 Notice of Interpretation on Use of Parent's Insurance Proceeds, contained in 45 Fed. Reg. 86, 390 (December 30, 1980).  The interpretive notice provided, in part, “The Secretary interprets the requirements that a free appropriate public education be provided "without charge" or "without cost' to mean that an agency may not compel parents to file an insurance claim when filing the claim would pose a realistic threat that the parents of handicapped children would suffer a financial loss not incurred by similarly situated parents of non-handicapped children.  Financial losses include, but are not limited to, the following: (1)  A decrease in available lifetime coverage of any other benefit under an insurance policy; (2)  An increase in premiums or the discontinuation of the policy; or (3)  An out-of-pocket expense such as the payment of a deductible amount incurred in filing a claim. The Raymond S. court looked to the Seals decision holding: “Because of [IDEA]'s emphasis upon a free appropriate public education, this Court concludes that parents of a handicapped child cannot be required to utilize their private medical insurance benefits where the utilization of those benefits would cause them to incur a financial cost.  .  .  .  Any other conclusion would be inconsistent with the concept of a free appropriate public education which underlies the [IDEA].” 614 F.Supp. at 305-306. The defendants in Seals attempted to argue that the family voluntarily filed for insurance coverage.  The Raymond S. court dismissed that argument preemptively, saying that: “Situations are legion in which a person might voluntarily look to their own insurance carrier to pay benefits immediately, even though they believe another is ultimately responsible for paying for their loss.” Fn. 12 at 1295. The Raymond S. court concluded that the school district was required to reimburse parents for the insurance benefits which paid for the evaluation of their son.

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