How much can we learn about HEALTH plan sponsor fiduciary responsibility from a legal case involving an employee class action lawsuit against the employer plan sponsor’s RETIREMENT plan fiduciaries? As it turns out, PLENTY!
A U.S. District Court case, Khan v. Bd. of Dir. of Pentegra Defined Contribution Plan, addresses the need for plan sponsor fiduciaries to safeguard plan assets, and states in par… ”Once the damaged party satisfies the qualification requirements, the burden under ERISA shifts to the defendants to disprove any portion of potential damages by showing that the loss was not caused by the breach of fiduciary duty.”
While the basis for the Pentegra case revolves around the plan fiduciary allowing the payment of excessive retirement plan administrative fees, there is a direct correlation to health plan fiduciary responsibilities… who pay fees in the form or ASO fees, PBM fees, subrogation fees, advisor consulting fees, network access fees, etc.
As a health plan sponsor, do you have a fiduciary process that guards against the payment of excessive fees? Could your current practice stand up to the challenge of an employee lawsuit? Can you prove that your benchmarking process is above reproach? Have you documented your results?
If you answered “No” to any of these questions, act NOW to create a fiduciary process that will provide you with an affirmative defense to potential employee lawsuits.
