Law Firm Faces Fine for Sharing Confidential Information With DOL 

Lawyers representing patients in a lawsuit against United Behavioral Health for insufficient mental health and substance abuse treatment coverage may face a tentative $50,000 sanction for disclosing confidential information to the Department of Labor. 

Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California issued on Tuesday a tentative order imposing sanctions on Arnall Golden Gregory LLP and one of its attorneys for violating a protective order related to their client’s lawsuit against the insurer. 

The court ruled that the lawyers violated the protective order by engaging in a common interest agreement, through which it transmitted documents to the DOL. Rogers’ order provides the parties with a chance to contest the sanction before it is finalized. 

Common interest agreements allow attorneys representing different clients with similar legal interests to share resources and information with the DOL, or at times, the DOL shares information with plaintiffs’ lawyers. The Employee Benefits Security Administration’s use of CIAs with plaintiffs’ law firms struck a nerve with ERISA defense attorneys and prompted a request for review by the DOL inspector general during the Biden administration. 

Republican lawmakers have also taken issue with the agreements. In September, the Balance the Scales Act, introduced by Representative Michael Rulli, R-Ohio, was approved, in a party-line vote, by the House Committee on Education and the Workforce. 

The legislation would mandate that EBSA provide Congress with an annual report detailing any “adverse interest agreements” made by the agency. An adverse interest generally denotes scenarios where personal interests clash with an organization’s obligations, potentially resulting in improper decisionmaking—an issue the DOL has faced accusations of from House Republicans. 

Democrats, who universally opposed the legislation in committee, insisted that the agreements were rare as well as legal.  

Daniel Aronowitz, the new head of EBSA, has criticized the agency’s inability to effectively manage lawsuits related to benefit plans filed by plaintiffs’ firms. For that and other reasons, it is unlikely that the DOL will execute similar agreements under the current administration, says Andrew Oringer, general counsel and partner at Wagner Law Group, who advises employers on ERISA matters. 

“It’s a significant development, in terms of a potential chilling effect, on … efforts to have lawyers and the DOL team up to chase down employers,” he says.