For many Americans,
This year alone, workers from Johnson & Johnson and Wells Fargo have filed class action lawsuits against their respective companies for violating their fiduciary duty under the Employee Retirement Income Security Act, or ERISA, the federal law that establishes standards for private sector retirement and health plans.
The plaintiffs have argued that their employers failed in their selection of prescription drug plans as well as in their
It's important to note that under ERISA, employers are considered fiduciaries with two primary duties: the duty of loyalty, which means employers must act in the best interests of their health plan members, and duty of prudence, which means employers must be thoughtful and diligent about the decisions they make that impact the plan and its members.
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The workers who filed these lawsuits have a case, and they likely won't be the last to come forward against their employers and health plans, says Troy Sisum, chief legal officer of Imagine360, a self-funded health plan solution for employers.
"Under ERISA, a fiduciary of a health or retirement plan has obligations to act prudently and in the best interest of the plan — and on the retirement side, they've developed a body of litigation looking at the way fiduciaries manage retirement plans accordingly," says Sisum. "[Law] firms are taking what's been so helpful for them on the retirement side over to the health side."
Employers will likely be targets for these lawsuits, given their role as fiduciaries, explains Sisum. But health insurance companies can also expect to be scrutinized. Last year, food company Kraft Heinz sued Aetna for violating ERISA, claiming that the insurance company approved $1.3 million worth of claims that were missing information or incomplete. Kraft also accused Aetna of overcharging them and refusing to share plan data. Sisum points out that it's more vital than ever that employers have transparent advisers and brokers; they aren't necessarily held to ERISA standards, so they aren't likely to go to court alongside employers.
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"It's easier for an attorney to assert allegations against somebody who has a statutory obligation to act in the best interest of the plan," says Sisum. "It's smart to have good advisers, attorneys and brokers, so you can have a good process around the decision-making for the group health plan."
Sisum advises employers to take a second look at their health plans, their brokers and their insurance carriers. They should monitor the performance of their health plan against ERISA standards and assess whether their plans are working in the best interest of the company and its workers. A few red flags include low engagement in their health plans, a low number of preventative care visits or a high number of emergency room visits. If employers can't access their claims or other data surrounding their plan, then they're likely with the wrong partners.
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Sisum is confident similar lawsuits are on the horizon, and employers take it as a sign that they can build better health plans, ones that benefit their business and employees.
"Regulators will sit back and watch how these [cases] unfold and tinker if necessary," he says. "This is an opportunity to really understand your health plans."
