Health Plan Management Risks
Compliance Failure, Litigation, & Rising Costs
Company health plans, often overlooked by boards, now represent a growing legal and financial risk. Just like retirement plans, health plan mismanagement is triggering lawsuits and regulatory scrutiny under ERISA regulations. Employers like Johnson & Johnson, Wells Fargo, and Mayo Clinic face class actions for fiduciary breaches, potentially costing millions.
Why This Matters To The Board
- Material Financial Risk: Liability is no longer theoretical. Employers and executives are liable with courts certifying class actions.
- Regulatory Scrutiny: Audits from the Department of Labor and state attorneys general are on the rise, exposing costly oversights.
- Reputational Damage: Lawsuits result in negative press highlighting mismanagement and employee harm.
- Service Provider Defenses: Vendors claim they follow contracts with courts holding employers accountable.
- Employee Impact: Employees endure preventable tragedies—overpayment for life-saving medications, suicide attempts without mental health support.
The Opportunity
Strong compliance isn’t just about risk. It’s also a competitive advantage:
- Save Money: Optimize contracts and eliminate wasteful spending.
- Employee Satisfaction: Offer better benefits and access to care.
- Talent: Effective health plans are key to recruitment and retention.
What The Board Should Do: Act Now
- Educate Management: Conduct fiduciary training to mitigate risks.
- Form a Fiduciary Committee: Assign experts to oversee compliance.
- Benchmark Costs: Compare plan expenses to market standards.
- Review Contracts: Eliminate harmful language and practices.
Don’t Wait For A Crisis
It’s essential Directors and Management understand and act on the risks and opportunities presented by Health Plan Benefits
Schedule a consultation today to protect your organization and unlock the full value of your health plan.
