Friends, as you know, we are obsessed with lots of things. Our dogs, international travel, fairly trashy happily ever after romance novels, our Rothys, and ERISA case law, to name a few. So, we’re very excited to tell you we’ve got a new ERISA lawsuit on our minds, and we think you should look into it too.
This case was recently filed in Connecticut federal court against Elevance Inc. (Elevance Health), formerly known as Anthem Inc., with claims of ERISA violations. The complaint, filed on December 5, 2022, asserts that the defendants breached their fiduciary duty under ERISA by denying the plaintiffs access to their plan claims data, failing to manage the claims “prudently, loyally, and in compliance with documents governing the plans,” and partaking in “prohibited transactions relating to the management and disposition of plan assets.”
What does all that legalese really mean? To put it more simply, the plaintiffs were denied access to their own claims data. Further, they were charged higher rates for services than Elevance Health’s negotiated rates, and the plaintiffs contend that Elevance Health did not cooperate when the group health plans involved in the case attempted to resolve the excess charges through direct provider negotiations.
The self-funded plans pay a per-member, per-month rate for access to the defendants’ networks and the discounted rates that Elevance Health negotiates with providers and facilities. According to the complaint, the plaintiffs discovered Elevance Health had been overcharging them when they began researching their claims data based on Yale New Haven Hospital’s and Hartford HealthCare facilities’ negotiation rates, which both facilities posted on their websites.
Elevance Health denied the plaintiffs’ request to review the information related to their plan claims data, claiming “Anthem (Elevance Health) controls all aspects of its relationships with its network providers and takes the position that information related to Anthem’s provider network, provider negotiated rates, provider discounts, provider contract terms, claims processing, and claims payment, is proprietary and can be kept from plan fiduciaries even when asked by the plan fiduciaries to provide this information.”
Why is this important, you ask?? First, as we noted in our previous post, litigation that can rock the employee benefits world (and our worlds) can be filed at any time. So, to quote the late, great Alistair Moody, “constant vigilance!”
Second, this case gets at a very important aspect of ERISA—fiduciary duty. The employer, as the plan sponsor, has a fiduciary duty under ERISA to act in the plan's and its participants' best interest. However, does a service provider hired by a plan sponsor to administer the plan and pay its claims also have fiduciary responsibility, even if they are not identified as the fiduciary in the plan’s documents? In this case, the plaintiffs assert that they do. But, whether an ERISA service provider, as defined by 29 U.S.C. §1002(14)(B), can become a functional plan fiduciary and when that standard might be triggered is a hotly debated topic in ERISA case law, as evidenced by decisions in Teets v. Great West and Rozo v. Principal Life Insurance Co.
Third, the role of a plan’s service provider to provide them with claims and negotiated rate data isn’t just an important issue in this specific case. Access to claims data and the cooperation of service providers is critical for group plan sponsors when it comes to compliance with the final Transparency in Coverage regulation and several components of the Consolidated Appropriations Act, 2021. Group health plan sponsors need the cooperation of service providers to comply with the machine-readable claims data files transparency requirement, to complete RxDC reporting, and to build and maintain their transparency tools for plan participants. Comprehensively analyzing a health plan’s quantitative and non-quantitative treatment limitations for Mental Health Parity and Addiction Equity Act compliance purposes also requires service providers to provide de-identified claims data and other operational information.
Based on our observations, service providers have a mixed record on providing the data plan sponsors need to meet their federal compliance obligations. Most claims administrators have made the machine-readable file data available in some form. The jury is still out on how service providers will do with making the data needed for RxDC reporting and transparency tools available to plan sponsors, given that the first deadlines for these requirements are December 27, 2022, and January 1, 2023, respectively. It appears that transparency tool assistance is going better than RxDC reporting help, but we’ll have to wait and see.
Where group plan sponsors are really struggling is with NQTL analysis data collection efforts. While some vendors in the market are doing a stellar job with making plan data available to self-funded clients, many more are: (1) only providing aggregate claims data reflective of their whole book of business rather than the necessary plan-level data; (2) refusing to provide plan data unless the group is under federal audit; or (3) refusing to provide group-specific data at all. So, the potential for federal court action that might compel service providers to cough up a group’s claims data to fulfill a fiduciary duty is pretty exciting to the two of us, given that we work with self-funded plans on compliance issues daily.
What do you think, friends? Are you keeping a close eye on this litigation too? Or, do you have no interest in attending our ERISA case law nerd watch party? (Our parties typically feature amazing charcuterie boards, delicious hot crab dip, and massive quantities of homemade chocolate chip cookie brownies in case you need any extra incentives). Let us know what you think, and we will keep you in the loop on any breaking news updates as they happen.
