Health Plan TPA Still a Fiduciary Despite Disclaimer

U.S. District Judge William J. Martini of the U.S. District Court for the District of New Jersey made the ruling in a suit filed by a Jersey City, New Jersey, municipal securities brokerage firm against the TPA for its health plan. Martini rebuffed an argument by defendant Loomis Company of Wyomissing, Pennsylvania, that it was not a fiduciary for the health plan sponsored by plaintiff Hartfield , Titus & Donelly Inc. 

Even though Loomis may have expressly disclaimed fiduciary status in its service contract with Hartfield, Martini said the Employee Retirement Income Security Act (ERISA) forbids fiduciaries from trying to throw off their responsibilities in that manner. Because Loomis had discretionary control over plan assets, Martini said it was, in fact, a fiduciary.

The suit alleged that Loomis overpaid for claims requesting coverage for infertility and substance abuse treatment submitted by three participants by more than $85,000 despite the plan’s $10,000 cap on infertility-related expenses and $35,000 lifetime cap on substance abuse treatment claims.

“By both failing to properly process claims and making payment on unqualified claims, Loomis breached its duty under its agreements and did not act with the care and prudence expected under the circumstances,” Martini declared.

The case is Hartfield, Titus & Donnelly LLC v. Loomis Co., D.N.J., No. 08-3329 (WJM).