TOPEKA, Kan. – The Kansas Supreme Court has ruled that the health insurance plan of the Wichita Public School district is subject to state regulation, marking a victory for one custodian.
In the case 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 determined that Timothy Towne, a custodian for the school district, had sustained injuries in a car crash. According to the district’s employee health benefit plan, a portion of Towne’s medical expenses was covered, but reimbursement was required later as per the plan’s subrogation clause.
Court records reveal that Towne filed a breach of contract claim against the district, contending that the subrogation clause was unenforceable under state law. The district court dismissed the claim, citing the exemption of USD 259′s plan from regulation under the Kansas Insurance Code, a decision affirmed by the Court of Appeals.
In a unanimous decision, Justice Caleb Stegall, writing for the court, overturned the lower courts’ rulings. The Supreme Court held that state law does not exempt self-funded plans from regulation under the Insurance Code. Furthermore, the justices indicated that the district’s plan is considered a health benefit plan under state law, thereby classifying USD 259 as a health insurer subject to anti-subrogation regulation.
