J Simmons Posted June 4, 2008 Report Share Posted June 4, 2008 Situation: ER is "plan administrator" of a self-funded health plan. The cost of coverage borne by the EEs is elected and then effected through a cafeteria plan. The ER pays monthly to a TPA the amount invoiced to cover approved claims. The ER also pays an Admin Fee, out of which the TPA pays certain expenses like the cost of PPO participation. The ER also pays the TPA a lump sum month for the cost of stop-loss coverage. Out of that, the TPA pays the insurer a net premium (no commissions component). The TPA keeps the rest--an amount not disclosed to the ER. The ER has discovered this situation, and is in the process of investigating further before it works towards recouping the undisclosed amount. The TPA appears to have become an ERISA fiduciary by reason of not having specified in its annual renewal proposals, invoicing or elsewhere how much the TPA was keeping as a 'stop-loss placement fee'. And for the same reason, to have breached that fiduciary duty. Patelco Credit Union v Sahni, 262 F3d 897 (9th Cir 2001) and Chao v Crouse, 346 FSupp2d 975, 988 (SD Ind 2004). Despite the billing problems, the ER is asking if it exposes itself to any fiduciary, co-fiduciary or other liaibilities by reason of continuing with the TPA if the stop-loss placement fee is returned and the ER hereafter monitors the TPA more closely. The ER has not decided if it even wants to continue with the TPA on those terms, but wants to know if that's an option. Initially, my thoughts are that if the ER ever becomes unable to cover the cost of any health benefits promised and at that time the ER's assets have been improperly depleted by amounts collected by the TPA, the CEO, president and board of directors might be held personally liable to the employees for having caused the ER to continue using the TPA knowing of the fiduciary breaches uncovered at this time. Any other thoughts? John Simmons firstname.lastname@example.org Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation. Link to comment Share on other sites More sharing options...
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