Stewart McKelvey

from their traditional group benefi ts providers to ASO plans specifi cally designed to serve their com- panies' particular insurance needs. For insurance companies who administer group plans for other entities, it is important to know from the outset whether the third party adminis- trative role for a particular employer will be one which attracts potential liability to insureds or one which is suf- fi ciently defi ned and limited to insulate the administrator from such liability. A recent case from the New Brunswick Court of Queen's Bench highlights the potential risks for insurance companies which administer group bene- fi t plans under ASO contracts. In LeBlanc v. Atlantic Blue Cross Care, 2011 NBQB 348, the court considered a summary judgment mo- tion brought by Blue Cross, which was seeking a declara- tion that Blue Cross was not a proper party to an action for reinstatement of benefi ts under a group disability in- surance policy. The insured " In support of this position, Blue Cross empha- sized that liability for all payments of long-term disability benefi ts had been entirely assumed by the province's SCIB and Blue Cross was not the underwriter of the plan. Blue Cross further argued that the plaintiff had no privity of contract with Blue Cross. In response to these argu- In the past, only plaintiff also sought damages for breach of contract and for bad faith. In defending this claim, counsel for Blue Cross raised the preliminary issue of whether Blue Cross was in fact an appropriate party to the action. Blue Cross maintained that, pursuant to its ASO agree- ment with the province, the proper defendant to be named in the plaintiff's action was the Province of New Brunswick through the Standing Committee on Insured Benefi ts (SCIB). government and large businesses had access to ASO plans, while smaller employers had fewer options for group benefi ts plan design " Given that Blue Cross had been retained by the province to provide administrative services only and the province funded the benefi ts in question, counsel for Blue Cross argued that an employee covered under a self-insured group plan admin- istered by an insurer with an ASO contract can- not sue the administrative service provider under that plan. ments, counsel for the plaintiff argued that Blue Cross' role was to administer the prov- ince's plan as if it were an in- surance contract and to pay all claims out of Blue Cross' bank account with Blue Cross cheques. As such, the plaintiff argued that Blue Cross was a party capable of being sued. Ultimately the court found that the plaintiff could pro- ceed against Blue Cross, as it was Blue Cross that had deter- mined that her disability bene- fi ts should be terminated. In coming to this conclu- sion, the court reviewed three other decisions in which it had been held that administering insurance companies were not parties to the contracts with the insureds and then distin- guished these cases from the case involving Blue Cross. The evidence indicated that Blue Cross had more duties and more author- ity than the insurance companies whose roles had been considered in the previous cases. In relation to the plaintiff's plan, Blue Cross was to provide adjudication of claims and computation and issuance of benefi ts. This was not done in con- sultation with SCIB. It was Blue Cross who decided who received benefi ts, the amount of the benefi ts and how long claimants were to receive benefi ts. In cases of overpayment, it was Blue Cross who would recover the overpayment of the benefi t. The court also commented that it was presumed that Blue Cross would sue in its own name to recover an overpayment or improper payment of benefi ts. The court further noted that the New Bruns- wick Court of Appeal's 2004 decision in Walsh v. DOING BUSINESS IN ATLANTIC CANADA WINTER 2012 5

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