Cross-Plan Offsetting and ERISA Compliance: Avoiding Participant Claims, Ramifications of Recent Court Decisions

Description

The Eighth Circuit's ruling in Peterson v. UnitedHealth Group Inc. brings light to the pitfalls of cross-plan offsetting by insurers and TPAs. The recent ruling forces employers and insurers to take steps to ensure that the practices of TPAs are aligned with ERISA, plan documents and administrative services agreements.

Cross-plan offsetting occurs when a TPA of a health plan overpays a provider and resolves such overpayment by refusing to pay or reducing the amount to be paid to that provider for a future claim in connection with a different patient who is covered by a different health plan. In Peterson, the court ruled that nothing in the plan documents allowed the defendant to engage in cross-plan offsetting despite the defendant's argument that nothing prohibited them from doing so. Also, the court suggested that cross-plan offsetting may violate ERISA's "exclusive benefit" rule requiring that a plan’s assets be used for the "exclusive benefit" of the individuals covered by that plan.

The ruling in Peterson v. UnitedHealth Group Inc. has opened the door to a number of potential participant claims and employer liability. ERISA counsel and advisers must take steps to limit the ramifications of cross-plan offsetting and other TPA practices.

Listen as our panel provides a critical analysis of the Eighth Circuit's ruling in Peterson v. UnitedHealth Group Inc., fiduciary duties of plan sponsors, the legal ramifications of cross-plan offsetting, reducing risks in administrative services agreements, and best practices in limiting and managing participant claims.