Samuel Pope
Current Legal Trends
Recent developments in the healthcare benefits legal landscape underscore a significant shift in how plans are scrutinized. This is particularly concerning for self-insured plan sponsors and their fiduciaries. The latest high-profile case, Navarro v. Wells Fargo, has brought to light serious allegations of Rx benefits plan mismanagement. This case, focusing on alleged mishandling of prescription drug benefits, follows closely on the heels of Lewandowski v. Johnson & Johnson, which also spotlighted Rx mismanagement and is still ongoing. Lewandowski, on behalf of her class, alleged that Johnson & Johnson allowed pharmacy benefit managers (PBMs) to dictate terms that were not in the best interest of the Plan or its beneficiaries. Navarro focused the plaintiff’s stance on the Wells Fargo plan’s failure to address outrageous administrative fees facilitated by PBM spread pricing, which they claimed led to an inflated cost burden on the participants. Both cases focus on the sponsors’ mismanagement of their respective plan’s prescription benefits, which resulted in excessive costs imposed on participants through higher premiums and out-of-pocket expenses. These lawsuits represent a broader trend of increasing legal scrutiny within the health benefits sector, marking a period of heightened vigilance on both regulatory and litigation fronts. The private litigation momentum can be categorized into two primary types: suits against employers and those against third-party administrators (TPAs). For instance, besides the cases against Wells Fargo and Johnson & Johnson, there have recently been significant ERISA lawsuits against TPAs, such as Kraft Heinz v. Aetna (settled) and W.W. Grainger v. Aetna (ongoing). While the W.W. Grainger case specifically highlighted Aetna’s approval of medically unlikely claims, reflecting a failure to perform basic due diligence in their management, both cases allege a breach of fiduciary duty, mismanagement, improper adjudication, and an overall lack of transparency and accountability. All these allegedly hindered the plans’ ability to provide prudent oversight and led to excessive cost burdens on the participants. These cases highlight the legal vulnerabilities that can arise at multiple levels of plan management and administration if plan fiduciaries are not taking a proactive role in their oversight. With the obvious rise in private litigation, is it unreasonable to assume that regulatory action will not follow, subjecting fiduciaries to significantly higher fines for failing to provide supervisory oversight?
Legislative Momentum
On the legislative front, recent amendments to the Employee Retirement Income Security Act (ERISA) and the Public Health Service Act (PHSA), such as the Consolidated Appropriations Act of 2021 (CAA), have introduced stricter transparency requirements. These changes impose additional obligations on plan sponsors to ensure prudent oversight and effective management of their health plans. Each new transparency requirement essentially leaves sponsors without excuse for a plan’s mismanagement and increases their burden of responsibility more than ever before.
These enhanced transparency requirements are designed to mitigate risks and ensure that fiduciaries uphold their responsibilities with increased diligence, but often, without TPA support, plan sponsors are left holding the bag. The chain of compliance is only as strong as its weakest link—in this case, that “weak link” is primarily found in restrictions on a plan’s access to its own data which portions of the CAA are designed to prohibit.
Key Recommendations for Self-Insured Fiduciaries: 1. Stay Informed:
2. Implement Robust Oversight:
3. Consider Periodic Audits:
4. Enhance Data Access & Accuracy:
The increasing momentum in both litigation and legislation emphasizes the need for proactive measures. By staying informed and implementing robust oversight practices, you can better safeguard your plan and its beneficiaries. Ongoing monitoring of your plan, as opposed to “playing catch-up” through subsequent audits, keeps you better informed about the status of your plan and prepared to defend it against emerging legal threats.
BCI’s Role in Supporting Self-Insured Plans
Organizations like Benefits Claims Intelligence (BCI) play a critical role in supporting self-insured companies by providing detailed claim analysis services. These services are crucial for identifying overcharges, billing inaccuracies, and patterns that might suggest unnecessary or redundant services. Here’s how BCI can help:
Proactive Management in a Transparent Healthcare System
For self-insured companies, proactivity is essential for effectively managing their health benefits plan in today’s complex legal and regulatory environment. Partnering with firms like BCI can provide the sophisticated tools and strategies needed to manage your plan efficiently. As the healthcare landscape continues to evolve, the role of your service providers will be crucial in ensuring that you have the tools to not only meet regulatory requirements but also manage your plan in the most cost-effective manner resulting in savings to all participants.
Ready to safeguard your plan and unlock substantial savings opportunities?
Contact BCI today to schedule a consultation with our team and discover how our tailored plan analysis can protect your organization’s financial health.
