Schlichter Bogard Files 4 ERISA Complaints Related to Voluntary Benefits

Schlichter Bogard LLC, a law firm known for aggressively pursuing Employee Retirement Income Security Act litigation on behalf of plaintiffs, filed four similar complaints against different employers in U.S. district courts in Illinois and New York.

The complaints allege breaches of fiduciary duty related to the premiums charged for accident, critical illness, cancer and hospital indemnity insurance—voluntary benefits not subsidized by employers.

The complaints name the following employers as defendants: CHS/Community Health Systems Inc.; Laboratory Corp. of America Holdings; Universal Servies of America LP; and United Airlines Universal Services of America LP.

The lawsuits also named benefits consulting firms hired by the defendants—Gallagher Benefit Services Inc.; Mercer Health and Benefits Administration LLC; Lockton Companies LLC; and Willis Towers Watson US LLC—claiming that they engaged in self-dealing that harmed plan enrollees.

The cases against Community Health Systems Inc., Laboratory Corp. of America Holdings and United Airlines were filed in U.S. District Court for the Northern District of Illinois, Eastern Division, while the Universal Services of America complaint was filed in U.S. District Court for the Southern District of New York.

Schlichter Bogard LLC and all parties involved in the complaints either declined to comment, did not return a request for comment or could not immediately be reached for comment.

The complaints—each about 50 pages long—make similar claims. For example, each complaint alleges that the fiduciary failed to properly manage the plan by not monitoring, negotiating or ensuring reasonable carrier selection, broker commissions and loss ratios, causing plan participants to pay excessive premiums.

The complaints further claim that fiduciaries engaged in self-dealing and knowingly participated in each other’s misconduct, since the complaints named the core defendants, along with their benefits consulting firms.

The plaintiffs in the cases argue they suffered financial harm from the alleged breaches, mainly by overpaying for voluntary insurance benefits—costs they would not have incurred without the defendants’ actions.

The complaints state that, unlike traditional benefits subsidized by employers, employees pay the full cost of voluntary benefits via payroll deduction. As health costs rise, these benefits are marketed to employees to fill gaps not covered by standard health insurance and are often targeted at rank-and-file employees who are most likely to buy them.

Each complaint notes a 27% increase in the number of employers offering voluntary benefits and that, by 2018, nearly one-third of eligible employees participated. Participation rates rose to 28% in 2017 from 21% in 2014, according to Eastbridge Consulting.

The complaints also claim that the defendants allowed brokers to sell costly, low-value products to employees, incentivizing claim denials and driving up premiums due to commissions.