Kansas Court finds USD 259 health insurance plan not outside of state law

TOPEKA, Kan. (WIBW) – The Kansas Supreme Court has found that the Wichita Public School district’s health insurance plan is subject to state regulation in a win for one custodian.

The Kansas Supreme Court says that in the matter of Appeal No. 124,046: Timothy Towne, on Behalf of Himself and All Others Similarly Situated v. Unified School District No. 259, The Wichita Public Schools, the court said Towne had been injured in a car crash while he was a custodian for the school district.

According to the district’s employee health benefit plan, part of his medical expenses were paid but required later reimbursement as part of the plan’s subrogation clause.

Court records indicate that Towne filed a breach of contract claim against the district and argued that the subrogation clause was unenforceable under state law. The district court dismissed the claim after it found USD 259′s plan had been exempt from regulation under the Kansas Insurance Code. The Court of Appeals affirmed.

Writing for a unanimous court, Justice Caleb Stegall said the Supreme Court reversed the lower courts’ decisions and held that state law does not exempt self-funded plans from regulation by the Insurance Code. Justices also signaled that the district’s plan is considered a health benefit plan under state law, which makes USD 259 a health insurer subject to the anti-subrogation regulation.

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