Seyfarth Synopsis: A Court ruled that under the Affordable Care Act, an ERISA governed plan exclusion cannot unequivocally bar emergency medical care related to injuries sustained in a fireworks explosion.

Recently, a federal court in Minnesota addressed whether a participant in a self-funded ERISA-governed welfare plan, could recover $225,000 in medical care and expenses incurred for injuries participant sustained in an explosion while igniting mortar-style fireworks on Independence Day 2015. The plan had denied the benefit claim due to its illegal activities exclusion for medical care. In challenging the benefit denial, Plaintiff raised a mix of claims under ERISA, common-law and the Affordable Care Act (ACA).

The Court found that the illegal activities exclusion was unambiguous. It further found the exclusion was not void as a matter of public policy. In so finding the Court rejected Plaintiff’s novel theory that because “everyone” lights fireworks on Independence Day, applying the illegal activities exclusion would be improper

The Court found it could not determine on a motion to dismiss whether the illegal activities exclusion extended to firework use. It noted the plan was ambiguous as to which law governed the illegality of an activity. Plaintiff argued that the plan was ambiguous in that the applicable law could be Minnesota (Plaintiff’s residence, where igniting fireworks is illegal), Wisconsin (the employer’s home state, where the plan was given effect, where igniting fireworks is legal), or Federal (due to ERISA preemption, where no federal law exists that would render ignition of fireworks illegal). The appropriate governing law for criminal activity would typically be the state in which the act occurred, nonetheless, the Court declined to rule on that issue at the motion to dismiss stage and found Plaintiff’s ambiguity argument plausible.

The Court further found that because the plan at issue was a “group health plan” under the ACA and that Plaintiff sufficiently pled that the plan covers some services in an emergency department of the hospital, it was “facially plausible” that the ACA would require the plan to provide “emergency services” and could not deny such coverage. The ACA does not mandate that a “group health plan” cover emergency services, but it does mandate that if a plan does cover “emergency services” those services must be reimbursed at the same level in-network and out-of-network. A ruling that the ACA requires coverage for emergency services would be a very broad expansion of the law.

This decision highlights the importance of ensuring that plan language is clearly drafted so as to avoid preventable ambiguity. The decision further underscores plaintiffs’ utilization of the ACA to increase the theories and remedies available in ERISA benefits cases.