A recently filed lawsuit is a good reminder that self-insured health plan fiduciaries have a fiduciary duty to ensure that their health plans are being administered according to the plan’s terms and in compliance with law, while defraying the reasonable expenses of administering the plan.  In discharging this responsibility, plan fiduciaries must oversee any party to which they delegate fiduciary responsibilities, like third-party administrators.  Such oversight includes performing claims audits on the plan.  If plan fiduciaries experience difficulty receiving the detailed claims data needed to perform a thorough review from their third-party administrators, they should consider whether the services agreement with the third-party administrator provides them with the means to obtain that information given recent legislative requirements, like the “gag clause” prohibition in the Consolidated Appropriations Act of 2021. 

Background

Owens & Minor, a healthcare logistics firm, recently filed a lawsuit against Anthem Health Plans of Virginia, Inc., d/b/a Anthem Blue Cross and Blue Shield (“Anthem”), accusing Anthem of breaching its fiduciary duties by mismanaging Owens & Minor’s self-funded employee health plan. 

The lawsuit claims that in 2021, Owens & Minor requested plan data from Anthem so that the company could ensure Anthem was “faithfully administering the plan’s assets.”  Anthem allegedly delayed and obstructed Owens & Minor’s requests for health plan data.  The purported lack of cooperation eventually led Owens & Minor to file a lawsuit to access its own plan information.  After Owens & Minor obtained a portion of its plan data through the original lawsuit, the company filed a subsequent lawsuit in Virginia federal court based on what Owens & Minor says the data illustrates.

The newly filed complaint likens Anthem to “a fox in the henhouse” that allegedly “used Plan assets to enrich itself.”  The complaint alleges that the following acts, among others, constituted breaches of fiduciary duty:

  • “causing the Plan to grossly overpay claims, including payments above 100% of billed charges”
  • “causing the Plan to pay for the same medical claims multiple times”
  • “improperly classifying affordable generic drugs as specialty pharmaceuticals, which resulted in the Plan paying excessive prices”
  • engaging in “spread pricing” that charged the Plan more for prescription drugs than what was billed by providers.
  • withholding pharmaceutical rebates that should have been returned to the Plan.
  • alleged mismanagement of the BlueCard program, a program that enables members of one Blue Cross and Blue Shield (“BCBS”) plan to obtain health services in another BCBS plan’s service area.  According to the complaint, Anthem permitted other BCBS entities to impose excessive fees on the Plan.
  • use of out-of-network claim processing vendors, like MultiPlan, that resulted in Anthem pocketing exorbitant, unjustified fees for out-of-network claims.

The complaint alleges that Anthem’s mismanagement has caused at least tens of millions of dollars in damages.  Owens & Minor is seeking recovery of Plan losses caused by the alleged breaches.

Thompson Hine’s Takeaways

This case underscores the importance of group health plan fiduciary’s responsibilities for overseeing their third-party administrators.  It is not only a good idea to request claims data from third-party administrators, but also to conduct claims audits and analyze the data provided to ensure the plan is being administered according to its terms and in compliance with law.  Group health plan fiduciaries need to understand their rights to obtain claims data and audit such data under the terms of their services agreements with their third-party administrators.  Third-party administrators’ use of out-of-network repricing and negotiation vendors, like MultiPlan, has received heightened scrutiny recently due to a New York Times investigation, leading to letters from Senator Amy Klobuchar and the U.S. House of Representatives Committee on Education and the Workforce to government agencies requesting them to investigate these practices further.  Additionally, group health plan fiduciaries are becoming the target of litigation themselves (see the recent blog post “Potential Constitutional Standing Hurdles to Health Plan ‘Excessive Fee’ Claims” https://www.erisalitigation.com/2024/09/2476/), making a detailed claims audit sooner rather than later a good idea for group health plan fiduciaries.