November 19, 2018

FOR IMMEDIATE RELEASE

New Federal Class Action Details How Healthcare Conglomerate Incorrectly Identifies as a Government Body, Dodging Legal Obligations to Protect Employee Benefits

Operating in Three States and Employing over 65,000, Atrium is One of the Largest Non-Profit Healthcare Systems in the Country

CHARLOTTE, NC – Atrium Health, one of the country’s largest non-profit healthcare systems with over 65,000 employees and operations in at least three states, falsely claims to be a government entity to dodge certain legal protections for the participants in the company’s pension, 401(k) and healthcare plans, alleges a new class action lawsuit filed in federal court today. Such an exemption, claim the plaintiffs, who are former employees, places participants in Atrium’s retirement and healthcare plans at serious risk, decreases the security of Atrium’s retirement and healthcare benefits and forces participants to pay higher costs across the board.

According to the complaint, Atrium identifies itself as a governmental entity as it relates to compliance with the federal Employee Retirement Income Security Act (ERISA). ERISA, which was enacted by the U.S. Congress to protect people receiving benefits from their private-sector employers, exempts certain benefits plans from upholding these protections. One such exemption is for government-run plans, which allows state and local governments more autonomy in managing their tax-payer dollars. Despite not satisfying the federal definition of a government entity, Atrium claims the “Government Plan” exemption. With this special dispensation, Atrium’s retirement and healthcare plans engage in activities that would be prohibited for ERISA-governed plans, harming participants in the process.

“Atrium Health has jeopardized the well-being of its employees and their families for far too long,” said lead plaintiffs’ attorney Karen L. Handorf, Partner at Cohen Milstein Sellers & Toll PLLC, Chair of the firm’s Employee Benefits/ERISA practice group. “Plainly and simply, Atrium Health is not nor ever has been a government entity. Atrium is a healthcare behemoth trying to get away with spending money to expand its operations rather than on its employees. We are confident that the court will hold Atrium accountable to its legal obligations and ensure the company protects participants in its retirement and healthcare plans.”

In escaping ERISA’s requirements, Atrium’s benefits plans have experienced serious issues that jeopardize the long-term well-being of its employees. Atrium’s pension plan, for example, is dramatically underfunded -- by the end of 2017, its unfunded liability was $379 million -- and the plan has unlawfully denied participants their entire accrued pension benefits. Participants in the 401(k) plan receive limited information about the performance and expenses related to their investments, impeding their ability to make decisions about their retirement savings.

Atrium outsources the operation of its employee health plan to MedCost Benefits Services LLC, a subsidiary company in which Atrium holds a 50-percent stake. As a result, Atrium’s healthcare plan can charge significantly more than alternate networks, despite demonstrating no improvement in quality of care or services, allowing Atrium to pocket a portion of these profits, alleges the suit. This would be prohibited under ERISA’s rules, from which Atrium claims an exemption.

The new lawsuit exhaustively details why Atrium Health’s s retirement and healthcare plans cannot be considered governmental and therefore ERISA-exempt. Atrium administers its benefits plans independent of any oversight from state governments, for example, and Atrium’s employees receive no protections afforded civil service workers. What’s more, Atrium has a history of legal disputes with local and state government agencies, including an ongoing lawsuit with the State of North Carolina over Atrium’s alleged antitrust violations, and a recent suit brought by Mecklenburg County, NC, where Atrium is headquartered, to settle a contractual dispute with the healthcare company.

Formerly known as the Carolinas HealthCare System, the recently rebranded Atrium has operations throughout North Carolina, South Carolina and Georgia. The company owns, leases or manages 40 hospitals, as well as nursing homes, physician practices, home health agencies, radiation therapy facilities, physical therapy facilities, and other healthcare related operations, comprising more than 7,500 licensed beds and more than 65,000 full-time and part-time employees.

Already the largest healthcare system in the Carolinas, Atrium earlier this year announced plans to partner with Macon, GA-based Navicent Health to expand operations to serve central and south Georgia’s 750,000 residents.

The complaint was filed in the U.S. District Court for the Middle District of North Carolina. The plaintiffs are represented by Martha Geer and Karen L. Hanford of Cohen Milstein Sellers & Toll PLLC.

About Cohen Milstein

Cohen Milstein Sellers & Toll PLLC is recognized as one of the premier law firms in the country handling major, complex plaintiff-side litigation. With more than 90 attorneys, Cohen Milstein has offices in Washington, D.C., Chicago, Ill., New York, N.Y., Palm Beach Gardens, Fla., Philadelphia, Pa. and Raleigh, N.C. For additional information, visit www.cohenmilstein.com or call 202-408-4600.

 

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