Child Custody Decides Health Coverage Issue in Divorce

December 14, 2006 ( - The US District Court for the Western District of Missouri has ruled that when both divorced parents have health insurance plans, the plan belonging to the parent with child custody is responsible for benefit coverage of the child.

US District Judge Fernando Gaitan, Jr. ruled that if the Coordination of Benefits (COB) provisions in both parents’ plans say the plan of the parent awarded custody must pay the child’s medical expenses, then that person has the legal obligation to do so, even if the mother and father decide between them on a different child living arrangement.

Gaitan’s ruling came in the case involving Michael Richardson and Julie Ann Richardson who were divorced in 1993, with Michael Richardson getting custody of their son Kyle.

Michael Richardson is a participant in Kansas City-based Butler Manufacturing’s benefit plan, which is administered by Connecticut General Life Insurance Company.  Kyle Richardson was also covered by the plan at Julie Ann Richardson’s employer, R&R Marine Fabrication and Drydock, which was administered by Blue Cross & Blue Shield.

Kyle Richardson lived with his father until 1999, but then lived with his mother from 1999 until his death in 2003. During his time with his mother, he became very ill and received medical treatments that generated claims of more than $990,000.

Blue Cross had been paying Kyle Richardson’s claims until it realized in 2003 that the divorce decree obligated Michael Richardson’s insurance plan to pick up the medical tab.

According to Gaitan’s ruling, Connecticut General, as claims administrator for the Butler Plan, eventually paid nearly all of the claims for Kyle Richardson of more than $990,000. In October 2005, Butler and Connecticut General took the matter to court, seeking a judge’s order that Blue Cross was actually responsible for the bills and a mandate that Blue Cross reimburse Connecticut General for its outlays.

align=”left”> Definition of Custody

align=”left”>The Butler plan argued that the court should define custody as a layperson would, meaning that because Kyle Richardson was in his mother’s care during his illness and that she claimed him as a dependant on her tax forms and had to agree to him receiving medical care and treatment, she was responsible for the medical bills.  

Neither Blue Cross nor the Butler plan disagreed that both the plans’ COB provisions spell out that the parent awarded custody be responsible for the expenses. However, the debate hinged on the definition of custody.

Gaitan disagreed with the Butler plan and gave more weight to the divorce decree rather than the living and care arrangements later decided by the parents.“Although the parties may have agreed among themselves to a different living arrangement for their son Kyle, the Divorce Decree was never officially modified,” thus handing the sole responsibily of health coverage to the Butler plan, the judge asserted.

The case is Butler Mfg. Co. v. Blue Cross Blue Shield of Texas, No. 05-0437 November, 27, 2006.