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Health Benefit Liability: Schlichter Class Action Lawsuits
In the world of employee benefits, a seismic shift is underway, and it’s causing tremors of concern for some of America’s biggest companies. Law firm Schlichter Bogard, renowned for its pioneering work in retirement plan litigation, has set its sights on a new frontier: employer-sponsored health benefit plans. Schlichter’s current ads soliciting participants for class-action lawsuits against several major corporations are sending shockwaves through the industry.
The companies in Schlichter Bogard’s crosshairs are no small fish; the current list includes:
- Boston Scientific
- CSL Behring
- Dollar Tree
- Genuine Parts Company (GPC)
- Medical Solutions
- MGM Resorts
- Performance Food Group
- State Farm
- Trinity Health
The lawsuits are likely to allege a breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA). This move is significant for several reasons.
First and foremost, the fact that these ads are running publicly highlights a growing trend in the employee benefits industry: the litigators are coming. Schlichter Bogard’s success in the retirement space, where they’ve secured judgments and settlements exceeding $1.5 billion, did not go unnoticed. Other law firms followed suit, eager to replicate Schlichter Bogard’s achievements, and 401(k) litigation became commonplace. The same exact thing is happening in the health benefits industry right now.
While it’s probable that most of these employers will opt to settle out of court rather than face protracted legal battles, this list of lawsuits will prove to be 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.
Over the past two decades, fiduciary breach lawsuits targeting retirement plans have exerted immense pressure on employers. The result? A transformed 401(k) industry with lower fees, increased participation and transparency, and improved investment performance. The combined effects of these lawsuits have been nothing short of revolutionary.
While I don’t have a crystal ball, it’s tempting to speculate that a similar transformation may be on the horizon for the health benefits space. If history is any indication, this wave of litigation could drive down health benefits costs, enhance the quality of care, and establish transparency as the new standard.
However, the road ahead will likely be rocky. Legal battles, settlements, and compliance adjustments are all part of the process. To navigate this uncertain terrain, employers 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.
Mark my words, Schlichter Bogard’s foray into health benefit plan litigation is a harbinger of change in the industry. While lawsuits against prominent corporations may grab headlines, they are merely the start of a broader movement. Employers would do well to embrace fiduciary best practices and prepare for a shift towards increased transparency, improved care quality, and reduced costs in the world of health benefits. The journey may be challenging, but the destination holds the promise of a better future for employees and employers alike.
By: Jed Cohen, Co-Founder & COO, Fiduciary In A Box