By Bill Rusteberg
Why would any employer want to be in the health insurance business? The answer is most don’t. But the reality is they end up there because many are forced into the role by the Affordable Care Act whereas back in the day they were in because they wanted to be.
The Affordable Care Act (ACA) has turned every employer health plan into a de facto government regulated utility with ongoing federal compliance exposure. Plan sponsors are responsible for more than fifty compliance obligations (including notices, reporting, etc.) and any misstep creates a liability waiting for punishment.
As a fiduciary plan sponsors assume personal liability for decisions while vendors supporting the plan don’t. A growing number of lawsuits across the country attest to that, targeting plan sponsors in lawsuits including lawsuits by plan participants against their own health plan.
And it’s only going to get worse. The consensus within the legal community is clear, it’s fertile ground for plaintiff attorneys. Settlements against health plans will dwarf the Tobacco Settlement of years past. It’s a modern day feeding frenzy.
We became aware of this growing trend several years ago when we received a call from an attorney inquiring if we would be interested in bird dogging in search of potential clients. In yet another call from an insurance broker we were invited to participate in a joint effort on behalf of another law firm searching for unhappy plan members.
Large employer groups are stuck between a rock and a hard place. They can’t get out of the health insurance business without incurring crippling government fines. They can’t continue to stay in without risk. So, what’s their alternative?
We know and you should too.
