Another Lawsuit for Overpaying for Healthcare
Four former employees of Wells Fargo are suing the big bank, claiming the bank “mismanaged” its employee benefits plan by overpaying for many different prescription drugs.
You can READ FULL ARTICLE HERE.
These self-funded plans are governed and regulated by ERISA, and employers, aka, plan sponsors, are fiduciaries of such plans. Therefore, they have a fiduciary duty to “prudently manage plan assets” in the sole interest of the plan AND ITS MEMBERS.
Easier said than done, right? Most employers aren’t paying very close attention to “what” they are actually paying for healthcare services, including prescription drugs. What’s important to mention, is that in a self-funded plan, the employer monies, and employee monies are “co-mingled”, and whatever the plan spends for care/drugs, it’s using a big chunk of employee monies to pay for it all. This is where the failure of fiduciary responsibility comes into play in the lawsuit.
It can be argued, that if an employer is taking money from employee’s paychecks to “fund” their health plan, but is eggregiously overpaying for care, in this case, prescription drugs, then they are failing to prudently manage those funds.
One example cited in the lawsuit alleges Wells Fargo’s health plan pays $10,000 for a 90-day supply of fingolimod, a multiple sclerosis drug, even though the same drug is available in other retail pharmacies for $600-$900 for the same 90-day supply.
Johnson & Johnson was slapped with a similar lawsuit earlier this year, and has argued the case should be dismissed because the plaintiff/employee wasn’t taking any of the prescription drugs mentioned in the lawsuit, and therefore doesn’t have standing to challenge their costs.
Uhhhh, we disagree. That employee’s money, whether they are taking the prescription drugs personally or not, is contributing towards what the plan pays for the drug. The monies are “pooled”, remember??? So when a plan needlessly overpays for healthcare, they are wasting everyone’s money, not just a single plan member.
Employers/plan sponsors really need to start paying attention to these things, because it is being argued in court now that employers are failing in their fiduciary responsibilities when the health plan overpays for healthcare.
Are you overpaying for services? Drugs? CT Scans? MRI’s? Outpatient surgical procedures? Are you even aware of what a fair market price is for healthcare services? If you’re asking these questions, or wondering what you should do next, reach out to us, we can help. A good start is simply gaining a good understanding of pharmaceutical manufacturer and PBM revenue streams and whether or not those sources are passed through to your plan. This would include analyzing total plan cost, rebates, dispensing fees, administrative fees, generic spread, and other, often hidden revenue streams.
We can help you with your fiduciary duties, and ensure you don’t ever get sued for wasting employee funds inside the health plan.
