In 2021, courts stand poised to consider whether employers can kick benefit plan mismanagement suits to arbitration and whether two novel theories in class actions over retirement plans hold water.
And attorneys expect to see even more significant Employee Retirement Income Security Act disputes in 2021, with benefits litigation only growing as a field.
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7th Circ. Mulls ERISA Arbitration
In 2018 and 2019, the issue to watch in the ERISA litigation space was arbitration — specifically, whether plans could require workers to resolve fiduciary-breach claims through arbitration.
Two high-profile cases on the subject cleared the Ninth Circuit in those years: Munro v. USC , in which the court came down against forced arbitration, and Dorman v. Schwab , in which the judges allowed forced arbitration.
But the rulings left key questions unanswered, and benefits attorneys predicted the Ninth Circuit wouldn't have the last word on the subject of ERISA arbitration.
Those attorneys were right: Now, the Seventh Circuit is considering whether administrators can write mandatory consent-to-arbitration provisions into a benefit plan's summary plan document, requiring plan participants to resolve fiduciary-breach claims through arbitration.
The question arrives at the Seventh Circuit through a case accusing GreatBanc Trust Co. and Triad Manufacturing Inc.'s board of directors of violating ERISA by allowing Triad's employee stock ownership plan to purchase company stock at an inflated rate.
Triad's board attempted to compel arbitration in the suit in June, but an Illinois federal judge shot down the request in August. Now, the board is fighting to overturn that decision, saying a clause in its employee stock ownership plan's summary document mandates arbitration of fiduciary-breach claims.
The case is Smith v. Board of Directors of Triad Manufacturing Inc. et al., case number 20-2708, in the U.S. Court of Appeals for the Seventh Circuit.
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Health Plan Litigation On The Rise
Benefits attorneys recommended keeping an eye on suits accusing health plans of breaching their fiduciary duties in 2021, reiterating a longtime prediction that this area of litigation is going to keep growing.
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One such type of case accuses insurers and third-party administrators of improperly withholding payments to medical providers, using the justification that the company had overpaid the provider in the past. Provider-side attorneys say the practice, called "cross-plan offsetting," violates ERISA.
The Eighth Circuit handed providers a win in cross-plan offsetting litigation in 2019, ruling that UnitedHealth Group Inc.'s use of the practice constituted a misinterpretation of employee health plan documents. But the circuit court's ruling left a key question unanswered: Is cross-plan offsetting illegal under ERISA?
The courts will get another chance to answer that question in a suit against UnitedHealth Group filed in Minnesota federal court, which had made it to the motion-to-dismiss stage by December.
The issue has implications for employers, who may want to reconsider allowing the insurers they work with to engage in cross-plan offsetting when it comes to their employees' health plan.
The case is Scott et al. v. UnitedHealth Group Inc. et al., case number 0:20-cv-01570, in the U.S. District Court for the District of Minnesota.
The complete article can be viewed here.
Cohen Milstein represents the plaintiffs in both Smith v. Board of Directors of Triad Manufacturing Inc. et al. and Scott et al. v. UnitedHealth Group Inc. et al.