Federal Appeals Court Decision Reminds Employers About Their Duty to Monitor Service Providers of ERISA-Covered Health and Welfare Plans
A federal appeals court just illustrated the importance of an employer’s duty to monitor service providers that assist with the administration of employee welfare benefit plans. In the May 21 decision of Tiara Yachts v. Blue Cross Blue Shield of Michigan , the 6th Circuit Court of Appeals held that the employer adequately alleged that its third-party claims administrator (TPA) was a fiduciary and, as such, violated ERISA by causing the employer’s welfare plan to overpay medical claims . It also held that the employer is authorized under ERISA to seek equitable remedies from the TPA in the form of disgorgement of profits. What do you need to know about this decision, and what are the three big takeaways? How a Claims Payment Dispute Sparked an ERISA Showdown The employer, Tiara Yachts, alleged that its welfare plan’s TPA, Blue Cross Blue Shield of Michigan (BCBSM), systemically allowed out-of-network medical providers to overbill the employer’s welfare benefit plan for services tha...