Retirement and Health Plan Lawsuits: ERISA Violations?

Attorneys working with ClassAction.org are looking into whether certain companies violated a federal law called the Employee Retirement Income Security Act (ERISA) by mismanaging their retirement or health insurance plans.

The ERISA holds fiduciaries like plan sponsors and administrators responsible for ensuring that the plan is managed solely for the benefit of participants and their beneficiaries. A company could violate the law by, for instance, failing to remove poorly performing investment options from a retirement plan, allowing the plan to be charged excessive fees, or allowing a health plan to overpay claims. Mismanagement of a retirement or health plan could potentially cause participants to lose millions in savings or be overcharged in premiums and other costs.

ERISA Violation Lawsuits

Class action lawsuits have been filed against many companies over alleged ERISA violations. For instance, some cases have claimed companies have fallen short of their fiduciary responsibilities by selecting poorly performing or expensive investment options for a retirement plan when similar, lower cost and better performing options were available. Other cases accused companies of violating the ERISA by failing to monitor their retirement plan’s investment options and remove options that consistently underperformed.

Lawsuits have also claimed it is an ERISA violation for a fiduciary to allow a plan to be charged excessive fees—especially for large plans with the bargaining power to negotiate low costs and expenses.

A lawsuit filed recently against a third-party administrator for the Owens & Minor self-funded health insurance plan claimed the administrator’s “boundless avarice and neglect” caused it to violate its fiduciary duties “on all fronts”—specifically, by paying more for healthcare claims than was billed, taking kickbacks from providers, double-paying claims, and pocketing rebates meant for the plan, among other alleged abuses. According to the lawsuit, the health plan and its participants lost tens of millions of dollars as a result of the defendant’s alleged conduct.

How Could a Class Action Lawsuit Help?

A class action lawsuit could allow plan participants to recover money for any financial losses they may have experienced due to the plan’s mismanagement. It could also force their employer to ensure that its retirement plan or health plan is managed in accordance with federal law.

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