Another Employer Files ERISA Lawsuit Against TPA, Arising from Claims Data Dispute

On November 18, 2024, Owens & Minor, Inc., in its capacity as plan sponsor of the Owens & Minor self-funded health plan (the Plan), brought suit against the Plan's third-party administrator (TPA), Anthem Blue Cross and Blue Shield (Anthem), claiming various breaches of ERISA fiduciary duties and state law violations. Owens & Minor, Inc. v. Anthem Health Plans of Virginia, Inc., No. 3:24-cv-820 (E.D. Va. Nov. 18, 2024). The case is a continuation of a years-long dispute with Anthem over the latter's administration of the Plan. In 2023, Owens & Minor sued in the same court to compel Anthem to turn over claims data that it had requested to monitor Anthem's administration of the Plan and which Anthem claimed was confidential. Owens & Minor, Inc. v. Anthem Health Plans of Virginia, Inc., No. 3:23-cv-115 (E.D. Va. Feb. 13, 2023). That case settled out of court and resulted in Owens & Minor receiving some of the data it had been seeking. The new complaint asserts that the data received "demonstrates how Defendant used Plan funds to enrich itself and its affiliated companies and medical providers to the Plan's detriment."

The complaint describes the dispute over the Plan's data as the "crux of the case," as, according to the plaintiff, the ability for TPAs like Anthem to control plan data allows them to cover up "widespread misconduct" that has "resulted in the misappropriation and waste of billions of plan dollars," resulting in "ever-increasing healthcare costs and premiums." The complaint asserts that it was "reports of widespread TPA misconduct" that caused the plaintiff to seek the Plan's claims data in the first place. Last year, we covered another employer-initiated lawsuit raising similar ERISA fiduciary breach claims against Aetna in its capacity as TPA of multiple self-funded health plans, which ultimately went to arbitration. In the latest Owens & Minor complaint, the plaintiff asserts its suit is part of a broader push to uncover and deter "opportunistic" TPAs by rigorously scrutinizing their administrative practices.

Specifically, Owens & Minor alleges that its review of the Plan's claims data reveals that Anthem, an alleged functional fiduciary of the Plan that "possessed and exercised control over plan assets and over plan administration and management," violated its duties to the Plan in myriad ways, including by (1) causing the Plan to overpay claims or pay claims multiple times; (2) pocketing rebates and provider discounts that should have benefitted the Plan; and (3) agreeing to less favorable terms with providers for self-insured plans in order to benefit its fully insured business. The plaintiff additionally alleges that the defendant "transferr[ed] Plan assets to parties in interest" by overpaying affiliate Blue Cross and Blue Shield entities through the "BlueCard" program. The complaint supplements the ERISA claims with state law causes of action for breach of contract, breach of fiduciary duty and the duty of good faith, and fraud. It seeks damages and return of monies allegedly belonging to the Plan.

Depending on how this case proceeds, the court may have the opportunity to weigh in on multiple important questions touching on the relative rights and duties of health plan sponsors and administrators, including the scope of TPA fiduciary status beyond that stipulated to in plan service agreements and rights with respect to plan-related data, including data subject to confidential agreements between TPAs and providers.

DOL Announces Retirement Savings Lost and Found Database Information Collection Request

The U.S. Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) will start collecting information from retirement plan administrators on a voluntary basis to populate the new Retirement Savings Lost and Found database, an online search tool for workers and beneficiaries to search for and connect with retirement plans to identify unpaid benefits. In the SECURE 2.0 Act of 2022, Congress directed DOL to establish this online searchable database by December 29, 2024. EBSA is asking plan administrators of retirement plans that are covered by ERISA to submit, or to authorize their plans' recordkeepers or TPAs to submit, certain data to populate the database. 

In response to public commenters' cybersecurity concerns about the submission of participant and beneficiary data to DOL as part of this initiative, DOL states:

The Department has taken great care to ensure the security and confidentiality of participant data and reassures plan fiduciaries that if they voluntarily furnish data in response to this information collection request and follow the instructions for transmitting the data to the Department, they will have satisfied their duty under section 404 of ERISA to ensure proper mitigation of cybersecurity risks. Accordingly, plan fiduciaries' submission of data to the Retirement Savings Lost and Found in accordance with the system's instructions on submissions will not violate fiduciaries' duties of prudence and loyalty, but rather would promote participant interests in securing promised benefits in accordance with those obligations.

EBSA's announcement of its voluntary information request can be found here.