Are Political Subdivisions Stupid or Corrupt?

QUESTION: Do political subdivisions have a fiduciary duty towards management of their self-funded employee health & welfare plans? If so, why do some make really stupid decisions?

ANSWER: All self-funded health plans are governed by federal ERISA laws – as are public companies under Sarbanes-Oxley law. Both require a fiduciary obligation of employers to ensure the prudent use of health plan assets. Political subdivisions are not subject to ERISA however each state has enabling legislation addressing fiduciary duties of political subdivisions within their respective states.

QUESTION: Then I have two questions. 1. Why do some fail in their fiduciary duties if that is so important and 2. Why have those that fail in their fiduciary duties not been sued by plan members for overspending their money?

ANSWER: The answer to #1 is they are either ignorant or corrupt. The answer to #2 is – their time is coming. Lawsuits are already happening across the country. This will grow.

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