“The Oregon Potato Company Caper exposes, once again, the nasty underworld of health insurance brokerage” – Bill Rusteberg
By Doug Aldeen – ERISA Healthcare Attorney – Visit my website
Marsh McLennan was recently held to be a fiduciary on behalf of a level funded ERISA plan in a recent lawsuit in the Eastern District of Washington.
Background:
In the suit, the plaintiffs Oregon Potato Company (“OPC”) and the Plan, brought four causes of action against defendants Darrell Strong, Marsh McLennan, DWS Holdings LLC d/b/a Pinnacle Peak Consultants, and Deductible Reimbursement Company alleging:
(1) Equitable relief under ERISA Section 502(a)(3) against Strong and DWS,
(2) Violation of fiduciary duties under ERISA Sections 404 and 405 against all defendants,
(3) Failure to disclose and misrepresentation against Strong and DWS,
(4) Engaging in transactions prohibited under ERISA Section 406 against all defendants.
Case History:
In 2023, Marsh and Strong proposed and OPC subsequently agreed that OPC would change the Plan from a fully insured plan to a guaranteed level funded premium plan under which OPC would commit to paying a level amount towards benefits for two years. Marsh and Strong guaranteed the payments would be sufficient to pay claims under the employer-paid plan. Funding would come from a level employer-paid premium, an HRA employer-paid premium, stop loss insurance, and a banking management fee paid to Strong and Pinnacle Peak to manage the stop loss and manage claims.
Judge Dimke further noted that Marsh’s role in this transaction was to “manage the brokerage relationships and assist Pinnacle Peak in maintaining a guaranteed level premium for the Plan.” She further noted that at the end of the first year of the plan, Marsh and Strong reported that both the ERISA Medical Plan and ERISA HRA funding balances were positive.
However, in April 2025, she noted that OPC began to receive fee disclosures for the Plan Year 2023 IRS Form 5500 filing, which showed the full extent of compensation being paid to Strong and Pinnacle Peak — “management fees” in total amounted to $1,921,217 for the first year and an additional $800,000 for the second year.
Then on Sept. 3, 2025, OPC disbursed funds to the monthly medical and HRA claims, and on Sept. 12, 2025, OPC received an email from Strong indicating the plan had a deficit balance of around $600,000 and Premera, a third-party administrator and adjudicator of medical claims, was instructed to redirect all medical claims to OPC and no longer pay the claims.
Sunday Morning Bathroom Read Takeaway:
The NBA minimum salary for the 2025-26 season is $1.27 mm. Marsh and the other defendants allegedly ransacked the plan for $2.7mm or $1.35mm per year. Plus, I cannot imagine any of the defendants having the skill set and ability to take it to the hole and dunk on Shaq… .Fees greater than the NBA annual minimum salary in addition to not “minding the store” under these types of arrangements could be problematic.
Additional Reading:
Sponsor Sues Health Plan Consultant, Survives Motion to Dismiss
Marsh Can’t Escape Health Plan Mismanagement Suit – Law360 UK
Advisory Firm Can’t Duck Fiduciary Status in Healthcare Suit
