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Cases That Could Reshape Employee Health Plan Management Fees


Cases That Could Reshape Employee Health Plan Management Fees


Court proceedings and arbitration this year could help reshape the way employers manage their employee health plans. Congress set the stage for a wave of lawsuits back in 2021 when it expanded ERISA to regulate health care plans, including prescription medication plans. Originally passed in 1974, ERISA regulated employee retirement benefit plans with the goal of protecting employees from exorbitant management fees. Congress’s expansion of the law to regulate health benefits has inspired employees and employers alike to look more closely at fees related to health care. 


This closer scrutiny has already sparked a variety of lawsuits, including two cases we’re following closely. These high-profile cases involve both large players in the healthcare marketplace and iconic American brand names. 


  • In one of the cases, Kraft Heinz Co.’s Employee Benefits Committee accused Aetna Life Insurance Co. of fee mismanagement. Aetna, a subsidiary of CVS Health, provides third-party management of Kraft Heinz employee benefits. Specifically, the committee from Kraft Heinz accuses Aetna of collecting unlawful fees and also paying out millions in ineligible claims, resulting in higher premiums for employees (1). Late last year, Kraft Heinz’s Employee Benefits Committee voluntarily dismissed the lawsuit with plans to move its claims into arbitration. 

  • The other case is a class-action lawsuit, against the Pension & Benefits Committee of Johnson & Johnson, filed by employees of the company. The employees filed the class-action lawsuit in U.S. District Court, accusing Johnson & Johnson of mismanaging prescription drug benefits. The lawsuit claims Johnson & Johnson pays exorbitant and unnecessary fees to the private company who manages the company’s prescription drug benefit, breaching its fiduciary duties. The lawsuit also claims Johnson & Johnson agreed to undesirable contract terms with third-parties that provide prescription drug benefits (2). 


As these cases proceed through the court system and arbitration, they could help reshape ERISA’s new regulatory power over employee health benefits and the level of transparency health plan subscribers can expect from their employer and its service providers. The consequences to fee structures and fee disclosures could change the way employers manage health benefits, how employers interact with third-party benefit providers, and how much employers and consumers pay for these benefits.


We will continue following these cases and will provide updates as they progress.



 

Boutwell Fay LLP

For over 20 years, the attorneys and other professionals at Boutwell Fay have been successfully solving the complex legal puzzles in the areas of employee benefits and ERISA. We have a federal practice in all 50 states.


We are a nationally recognized ERISA law firm with an unquenchable thirst to continue to learn, share, and deeply care for clients.


 

Sources


Kraft Heinz Co. Emp. Benefits Admin. Bd. v. Aetna Life Ins. Co., E.D. Tex., No. 2:23-cv-00317, 2023

Lewandowski, V. Johnson and Johnson, Case 1:24-cv-00671, (US DC NJ) Filed 02/05/24


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