No Peace In Quiet … Employer Considerations As New Lawsuits Challenge Voluntary Benefits

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by Alex Smith

In a new wave of ERISA lawsuits, four employers were sued during the holiday season for allegedly breaching ERISA fiduciary duties regarding their voluntary benefits insurance offerings. The voluntary benefits at issue are accident insurance, critical illness insurance, cancer insurance, and hospital indemnity insurance.  The four putative class action lawsuits generally allege that the employers and their benefits brokers breached their ERISA fiduciary duties and caused the participants to pay excessive premiums because they (i) failed to engage in a prudent process when selecting the insurance offerings; (ii) failed to monitor the commissions received by the benefits brokers; and (iii) failed to monitor the loss ratios on the various insurance policies. Read more

One Too Many … Employer Considerations Following New Lawsuit Challenging Employer Providing Health Plan Options

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by Alex Smith

A recently filed lawsuit against Northwestern University and its health plan fiduciaries raises novel claims that could be problematic for employers that offer multiple medical benefit options, if the suit gains traction. The lawsuit alleges that the plan’s fiduciaries violated ERISA and breached their fiduciary duties by offering employees a medical plan option that provided insufficient value compared to an alternative option offered to employees. The plaintiffs allege that the “premium” plan option—which charges higher premiums in exchange for lower deductibles and cost sharing—is financially dominated by the “value” plan option because the lower cost sharing does not sufficiently outweigh the higher premium. This lawsuit is still in the early stages, and the court has yet to rule on whether the plaintiffs have plausibly stated a claim, let alone consider the merits of the allegations. Read more

No Shoes, No Shirt, No Problems… But Nonenforcement Policy Doesn’t Make Mental Health Parity Compliance Optional

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by Alex Smith

The Departments of Labor, Treasury, and Health and Human Services (the “Departments”) recently announced a nonenforcement policy with respect to the 2024 Mental Health Parity and Addiction Equity Act (“MHPAEA”) regulations or otherwise pursue enforcement actions based on a failure to comply, at least temporarily. The Departments appear to have taken this approach to be consistent with a pending lawsuit challenging the 2024 regulations. The Departments indicated the nonenforcement policy will apply until 18 months after the litigation has concluded. The Departments also indicated they will be reexamining the MHPAEA enforcement program more broadly. Read more

Smoke ‘Em One By One … Navigating the Wave of Tobacco Surcharge Lawsuits

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by Alex Smith

Over the past several months, numerous large employers and their health plan fiduciaries have faced lawsuits regarding their health plan’s tobacco surcharge. A tobacco surcharge wellness program typically charges a higher monthly premium to employees and covered dependents who smoke or otherwise use tobacco products to account for some of the higher medical costs associated with tobacco use. Tobacco users can typically avoid the surcharge by completing a smoking cessation program, regardless of whether they actually quit.

This wave of putative class action lawsuits began earlier this year even though employer health plan tobacco surcharges have been around for years and the HIPAA regulations permitting the surcharges were last updated in 2013. Since then, numerous lawsuits challenging employer health plan tobacco surcharge programs have been filed. Courts have yet to rule on the recently filed lawsuits, with the plaintiffs voluntarily dismissing one of the lawsuits prior to the court ruling on the employer’s motion to dismiss. Read more

Both Sides Now… Must Be Alert to Cybersecurity

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by Becky Achten

New guidance from the Employee Benefits Security Administration (EBSA) affirms that both sides—retirement plans and welfare plans—must take steps to secure participant data from cybercrime.

In 2021 the Department of Labor (DOL) introduced new guidance on best practices for maintaining cybersecurity, which included tips to participants who check their retirement accounts online. From this, many plan sponsors and service providers concluded that the guidance was only applicable to retirement benefits (such as 401(k), profit sharing, and pension plans). Read more

Hole in the Bottle… Employer Considerations After Another Lawsuit Against an Employer Health Plan

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by Alex Smith

Last week, former Wells Fargo employees filed a class action lawsuit against Wells Fargo and its health plan fiduciaries alleging that Wells Fargo’s self-funded health plan violated ERISA by paying its pharmacy benefits manager (PBM) excessive administrative fees and excessive fees for prescription drugs. This lawsuit appears to be similar to a lawsuit filed against Johnson & Johnson and its health plan fiduciaries earlier this year. Both lawsuits allege that the health plan paid its PBM exponentially more for certain prescription drugs than the price charged by certain retail pharmacies for the same drugs. Coincidentally, both lawsuits indicate the health plans are funded through a voluntary employees’ beneficiary association (VEBA) trust. See our prior blog post for more information on the heightened health plan fiduciary standards that may be driving these lawsuits. Read more

P-R-I-V-A-C-Y is Priceless to Me: The 2024 Privacy Rule

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by Leslie Thomson

The Department of Health and Human Services issued a final rule amending the HIPAA privacy rules (“2024 Privacy Rule”). The 2024 Privacy Rule limits the use or disclosure of an individual’s PHI in connection with reproductive healthcare for certain non-healthcare purposes, where such use or disclosure could be detrimental to the privacy of the individual, or another person, or the individual’s trust in their healthcare providers. Among other changes, the 2024 Privacy Rule added a new category of prohibited uses and disclosures of PHI, which prohibits the use or disclosure of PHI for any of the following activities:

  • to conduct criminal, civil, or administrative investigations into any person for the mere act of seeking, obtaining, providing, or facilitating reproductive healthcare, where such healthcare is lawful under the circumstances in which it is provided;
  • to impose criminal, civil, or administrative liability on any person for the mere act of seeking, obtaining, providing, or facilitating reproductive healthcare, where such healthcare is lawful under the circumstances in which it is provided; and
  • to identify any person for the purpose of conducting such investigation or imposing such liability.

Read more

Vacation, All I Ever Wanted – But Don’t Forget Your July Compliance Deadlines

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by Benjamin Gibbons

Congratulations! You made it to summer, that wonderful time of year when things at work (hopefully) slow down a bit and you’re able to take some well-deserved time off. Though before you Go-Go(‘s) (do you see what I did there?), be sure your July employee benefits compliance deadlines are covered.

July 29 – Summary of Material Modifications (SMM) – Were any of your organization’s plans materially amended last year? If so, you may be required to furnish an SMM to participants (or a revised summary plan description). Those SMMs must be provided no later than 210 days after the end of the plan year in which the change was adopted. So, for a 2023 change, the SMM deadline would fall on July 29 (you get an extra day this year because 210 days falls on July 28, a weekend). Read more

ERISA, ERISA…Just an Old Sweet Song Keeps ERISA on my Mind

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by Becky Achten

“Georgia” on your mind? As we look towards the upcoming Masters golf tournament weekend, our minds turn to the condition of the greens (exquisite), the players tee off order (does afternoon help or hinder Tiger on an expected rainy day?), and who will make that amazing chip shot out of the bunker to save par. It may not get quite the level of TV viewership of other sporting events, but benefit plan administration is a lot like golf: a series of pars, birdies and bogies, and—oh my, not a double bogie!

If you’re hitting par with your benefit plans, they’re operating smoothly, participants are happy with the offerings, and you’re in compliance with the most obvious regulations. All is good, but you probably won’t earn a green jacket. Read more

Should’ve Been a Cowboy, Court Inflicts Pain on Health Plan Sponsor After Participant Kicked by Bull

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by Alex Smith

A recent decision by a federal district court in Ohio in a health plan benefits dispute highlights the importance for health plan fiduciaries to properly review benefit claim denials to ensure that the claims administrator’s basis for denial is appropriate and that the claims administrator has properly considered information provided by the participant.

In this case, the participant sued after he was denied coverage for more than $100,000 of medical bills related to a broken ankle suffered when he was kicked by his bull calf. Even though the participant worked as an HVAC division manager, the health plan’s third-party administrator denied the claims based on the plan’s exclusion for on-the-job injuries because the participant owned a cattle farm from which he sold beef. The court ruled that the participant was entitled to coverage for his medical expenses because the health plan fiduciaries had the burden of demonstrating the plan exclusion applied. Read more