Litigation Coming to Health Plans?
Over the past two decades, fiduciary breach lawsuits targeting retirement plans have exerted immense pressure on pension plans. The result? A transformed pension plan industry with lower fees, increased participation and investment performance, and improved transparency. The combined effects of these lawsuits have been nothing short of revolutionary.
In the world of member benefits, a seismic shift is underway, and it’s causing tremors of concern for some of America’s biggest health plans. Law firm Schlichter Bogard, renowned for its pioneering work in retirement plan litigation, has set its sights on a new frontier: health benefit plans. Their current ads soliciting participants for class-action lawsuits against several major corporate health plans are sending shockwaves through the industry. The lawsuits are likely to allege a breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA). The mere fact that these ads are running highlights a growing trend in the health benefits landscape. Schlichter Bogard’s success in the retirement plan space, where they’ve secured judgments and settlements exceeding $1.5 billion, has not gone unnoticed. Other law firms are poised to follow suit, eager to replicate their achievements in the health benefits arena.
While it’s probable that most of these health plans will opt to settle out of court rather than face protracted legal battles, this list of lawsuits is merely the tip of the iceberg. As more law firms recognize the potential for lucrative settlements in health benefit plan litigation, a cascade of similar cases is likely to follow. Just as we’ve witnessed in the retirement space, this legal scrutiny could reshape the health benefits industry.
Legal battles, settlements, and compliance adjustments are all part of the process. To navigate this uncertain terrain, health plans should adopt fiduciary best practices promptly. Documenting adherence to the requirements of ERISA, the Consolidated Appropriations Act (CAA), Transparency in Coverage regulations, and other relevant laws and regulations is crucial.
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