Self-funded plan sponsors should review health claims data to ensure participants are not being overcharged by third party administrators

Excessive fee litigation is no longer confined to defined contribution plans. In recent months, plan sponsors of self-funded health plans have filed three cases against Aetna, Elevance, Inc. (formerly known as Anthem, Inc.), and Blue Cross Blue Shield of Massachusetts in their capacities as third-party administrators ("TPAs") under similar theories of liability. Plan sponsors should consider performing audits of self-insured plan benefit claims to assess whether participants are being overcharged.

The plaintiffs in these cases allege their plans' TPAs are fiduciaries because they exercise discretionary authority over claims payment. The plaintiffs argue that their TPAs must exercise fiduciary levels of care, skill, prudence, and diligence to identify, deny, and prevent the payment of fraudulent or improper claims. Allegations in these lawsuits center on the notions that 1) the TPAs are not complying with the Affordable Care Act and Consolidated Appropriations Act of 2021 requirements regarding full disclosure of claims data, and 2) from the claims data that has been received, it is apparent the TPAs engaged in reprocessing and repricing practices that egregiously overcharged the plans. Specifically, the cases make the following claims:

• In Kraft Heinz Company Employee Administration Board, et al. v. Aetna Life Insurance Company, plaintiffs allege Aetna has failed to turn over complete medical claims data as required by law, paid thousands in duplicate claims in 2016, failed to properly collect overpayments, reprocessed claims for a lower amount and failed to refund or credit the plan, engaged a repricing company to negotiate lower payments to out-of-network providers and then kept the difference, comingled plan assets with its own account, and took other measures to conceal its misconduct.
• In Trustees of International Union of Bricklayers and Allied Craftworkers Local 1 Connecticut Health Fund et al. v. Elevance, Inc., et al., plaintiffs allege that because Elevance (Anthem) controlled all aspects of the plan's relationships with the network, it was able to reprice claims and payments without the plan's knowledge. The repricing practice meant that the plan paid the higher price, and when Anthem renegotiated the claim payments down, it did not return the full (or any, in some instances) difference in cost to the plan.
• The appeal in Massachusetts Laborers' Health and Welfare Fund, et al. v. Blue Cross Blue Shield of Massachusetts alleges that Blue Cross failed to accurately price claims, which caused millions in overpayments by the plan. The plaintiffs allege Blue Cross calculated claim payment amounts higher than what providers actually billed, processed erroneous pricing for hospital stays and procedures, retained recovery fees even where overpayments stemmed from its own errors, and retained inflated recovery fees by applying the recovery fee percentage to the original claim amounts instead of the recovered amount.

Central to each of these cases is the underlying concern that plan sponsors may be exposed to fiduciary liability of their own if they do not pursue claims against their TPAs for excessive fees and fraudulent practices. Reportedly, plaintiff-side firms at the forefront of defined contribution excessive fee cases have been soliciting health plan participants through targeted online ads to be plaintiffs in the next generation of excessive fee cases against health plans.

What Plan Sponsors Can Do to Protect Themselves

Given the potential for new excessive fee cases against health plans, plan sponsors should closely monitor their service providers by reviewing their service provider agreements, claims data, and other disclosures. If a plan sponsor receives information indicating their service provider has been engaging in similar practices to those alleged in the lawsuits discussed above, proactive steps to recoup funds and replace such service providers should be considered.

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