ERISA Plan Litigators Use ‘More Credible’ Tactics in First Half of 2023

By Alex Ortolani - Mid-year report finds there were fewer cases filed, as plaintiff law firms catch up on those they brought in 2022, but new entrants are using more accurate fee and service benchmarking data, Euclid Fiduciary finds. Read Full Article…

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1. Decrease in Litigations: The first half of 2023 witnessed a significant reduction in excessive fee and fiduciary imprudence cases, recording only 21 as compared to the 89 cases for the entire year of 2022. Euclid Fiduciary, the fiduciary insurance underwriter, predicts that by the end of the year, there will be approximately 45 filings, indicating a decline of nearly 50% from the previous year. Daniel Aronowitz, the managing principal at Euclid Fiduciary, suggests that the decrease is more a result of law firms processing their load from the busy year of 2022 rather than an actual decline in litigation activities. He believes this lull in cases is "likely temporary."

2. Shift in the Nature of Claims: The trend of excessive fee cases seems to be on the decline, with a noticeable pivot towards investment underperformance claims. New trends in complaints include those pertaining to providers generating revenue from plan participant assets and allegations centered around the imprudence arising from the selection of investment funds in incorrect share classes. Aronowitz has identified an increasing demand from plaintiff firms for plan administration data, many of which eventually transform into lawsuits.

3. Emergence of New Entrants and Their Impact: Two new plaintiff law firms, Wenzel Fenton Cabassa PC and Christina Humphrey Law PC, have entered the litigation landscape, bringing with them more "thoughtful" arguments. Unlike the historical trend where excessive fee filings often relied on artificially inflated fee data, these firms employ more credible recordkeeping fee claims based on plan services. Some complaints from these firms even present participant fee disclosures detailing the exact fees charged to participants. These firms are also introducing novel "theories of liability," such as alleging imprudence against plan sponsors who don't monitor the interest float and other indirect incomes by recordkeepers.

Here Are 8 Trends for Large Employers

By Marissa Plescia - A new Business Group on Health survey revealed several key trends for large, self-insured employers. These trends show a rising prevalence of mental health challenges and a decreasing emphasis on virtual health. Employers are facing a changing landscape when it comes to healthcare, whether it’s in regards to mental health concerns for their employees, cancer driving up health costs or the increase in prescription drug prices. Read Full Article… 

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1. Addressing Mental Health Challenges: There's a significant increase in reported mental health issues, with 77% of employers witnessing a rise in challenges like depression, anxiety, and substance use disorders. In response, employers are intensifying efforts to improve access to mental health care. Planned strategies include low-cost virtual counseling, covering out-of-network treatments, and on-site mental health counselors. The emphasis is on ensuring that employees receive the necessary support through various programs and networks.

2. Cost Drivers in Healthcare: Cancer remains the dominant concern, with 50% of employers indicating it as the primary cost driver in healthcare. Employers are focusing on offering access to specialized centers for cancer treatment in upcoming years, and emphasizing regular screenings for early detection, like colon, breast, and skin cancer screenings. Prescription drug costs are also a significant concern. With 91% of employers highlighting rising pharmacy costs, which comprised 24% of their total health spend in 2022.

3. Evolving Perspectives on Virtual Health & Other Priorities: The initial enthusiasm for virtual health seems to be tapering, with 64% of employers currently believing in its long-term impact, a decrease from previous years. However, despite this decline, the numbers remain substantial in favor of virtual health. Employers are also emphasizing health equity, with 95% planning strategies to promote it. Additionally, transparency in pricing, cost management, and diversified initiatives for 2024 are on the agenda, with a focus on enhancing mental health services, virtual health options, and addressing high-cost claims.

Are hospitals still sharing patient data with Facebook?

By Giles Bruce - Are hospitals and health systems still sharing patient data with Facebook parent company Meta Platforms? Yes, they are, says a lawyer suing the tech giant. Attorney Jay Barnes said he sent Meta a list of healthcare providers that are still transmitting data to the company, according to an Aug. 16 Courthouse News Service story. At least 664 health systems and other providers have sent patient data to Meta, according to his clients' complaint. Read Full Article…

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1. Unauthorized Data Collection Allegations: Meta has been criticized for allegedly collecting unauthorized information, a claim brought to attention during a hearing where Mr. Barnes voiced his concerns. The U.S. District Court for the Northern District of California has allowed much of the related class-action lawsuit to proceed. While Meta's official stance is that their system is designed to prevent the transmission of sensitive data, numerous health institutions are being sued over the use of Meta Pixel, accusing it of sharing protected health information.

2. Health Systems' Involvement: Multiple health institutions, including Advocate Health Care and Aurora Health Care, have been scrutinized for their utilization of Meta Pixel to track online consumer behavior, essentially sharing health information which allowed Meta to refine its advertisement targeting. The awareness of this practice was notably heightened after investigative news outlet, The Markup, exposed it in 2022. Both Advocate Health Care and Aurora Health Care have recently agreed to a significant $12.2 million settlement in relation to one such lawsuit.

3. Wider Tech Industry Implications: The issue extends beyond Meta, with other tech giants like Twitter (now known as X), Google, and Microsoft also being accused of receiving patient data through similar technological means. While these allegations have made headlines and resulted in legal actions, it's crucial to note that as of now, none of these tech companies have confessed to any misconduct.

UnitedHealth beneficiaries' case over mental health denials partly revived

By Brendan Pierson - A federal appeals court has partially revived a closely watched class action by UnitedHealth Group beneficiaries accusing the insurer of wrongly denying claims for mental health coverage. A three-judge panel of the 9th U.S. Circuit Court of Appeals on Tuesday ruled that some beneficiaries may be entitled to have their claims reprocessed, reversing its own earlier finding. It sent the case back to San Francisco federal court, where the plaintiffs had won a sweeping order requiring UnitedHealth to reprocess more than 50,000 denied claims. Read Full Article…

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1. Background and Proceedings: The case originated from consolidated class action lawsuits in 2014 where UnitedHealth's mental health unit, United Behavioral Health (UBH), was accused of denying medical claims based on internal cost-cutting guidelines, rather than generally accepted care standards. Plaintiffs argued that this breached UBH's fiduciary duty under the Employee Retirement Income Security Act (ERISA). After a bench trial in 2020, Judge Joseph Spero ruled against UBH, ordering the reprocessing of over 50,000 claims and setting a 10-year oversight. In 2022, this ruling was reversed by a three-judge 9th Circuit panel. However, in January of the following year, this panel changed their stance slightly, reinstating breach claims but dismissing the reprocessing as a remedy.

2. Recent Developments: On Tuesday, the panel indicated that while the previous ruling was too extensive, there was room for more limited remedies. The court suggested that beneficiaries could have their claims reprocessed if they can demonstrate prejudice from UBH's guidelines. U.S. District Judge Michael Anello of the Southern District of California penned the opinion, which was concurred by Circuit Judges Morgan Christen and Danielle Forrest.

3. Implications and Reactions: The case has garnered significant attention due to its possible ramifications for mental health coverage. Several entities, including the U.S. government, major medical associations, and attorneys general from multiple states, have submitted briefs in support of the plaintiffs. They believe that the court's original decision could exacerbate the opioid crisis by curtailing coverage for addiction treatments. Brian Hufford, representing the plaintiffs, expressed satisfaction with the latest ruling, stating, "We're back in the fight." Conversely, UnitedHealth and its legal team have not provided any comments yet.

To build an AI-fueled culture, leadership views can’t be a ‘mystery’

By Jill Barth - The number of organizations that have embraced the use of artificial intelligence has been gradually building in recent years. But, thanks to the swift adoption rate of new tools, particularly ChatGPT—which gained 1 million users in just one week after its launch earlier this year, according to data from Morgan Stanley and UBS—efforts to build an AI-fueled workplace culture now need to be kicked into higher gear, says Katheryn Brekken, Ph.D., of the Institute for Corporate Productivity (i4cp). Read Full Article…

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1. Embracing AI in Organizational Culture: Brekken and Kevin Oakes, the CEO of i4cp, presented preliminary research to HRE readers in a pre-conference workshop highlighting the increasing importance of AI in reshaping organizational cultures. Their survey of senior leaders from large organizations revealed that 42% are currently exploring AI's capabilities, while less than 30% are uncertain about their leadership's stance on AI. Oakes emphasizes the significance of leadership agility in creating an adaptive culture, ready to harness AI's transformative power for fostering innovation and driving progress.

2. Adoption of a Digital Mindset is Essential: Other HR experts, including Jason Averbook of Mercer | Leapgen, underline the necessity for HR and top-tier leadership to foster a 'digital mindset' within organizations. This mindset goes beyond merely implementing new technologies; it revolves around the idea of guiding the company with a technology-centric vision and strategy, ensuring alignment with the company's overall objectives. Averbook also emphasizes the importance of understanding and implementing a digital strategy rather than just managing operational systems.

3. Safe Experimentation with Generative AI: Both Averbook and the i4cp team stress the idea of conducting 'healthy experimentation' with AI tools, ensuring that these experiments are aligned with the organization's vision and safety protocols. There's a concern that without clear guidance, employees might utilize AI without informing leadership, which 66% of the survey respondents believe is happening. Proper guidance includes ensuring sensitive data protection and informing relevant parties when issues arise. Oakes and Brekken assert that such controlled and insightful experimentation can spotlight how AI can improve efficiency and problem-solving within HR, especially in areas like learning and development, people analytics, and talent acquisition.

Pfizer weighs cutting costs as COVID drug sales ebb

By Ned Pagliarulo - Revenue in the second quarter declined by 53% year over year due to lower sales of Pfizer’s coronavirus vaccine and antiviral, which have been less in demand this year. Pfizer may cut costs later this year if sales of its COVID-19 vaccine and antiviral drug remain slower than expected through the fall, when the company plans to roll out an updated booster shot. Read Full Article… 

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1. Revenue Decline and Business Shifts: Pfizer reported a 53% year-over-year decline in Q2 revenue, attributed to reduced demand for its vaccine Comirnaty and the COVID-19 pill, Paxlovid. However, excluding these products, the company's revenue increased by 5%. A previous surge in sales was due to widespread use and government stockpiling of these products in 2021 and 2022, leading to Pfizer's acquisition of multiple biotech firms and bolstering its shareholder dividend. With lower COVID-19 case counts and a shift from government bulk purchases to commercial market sales, Pfizer faces challenges in forecasting future revenue for Comirnaty and Paxlovid. Cost-cutting measures, if necessary, will focus on Pfizer’s “COVID-19 cost base."

2. Future Outlook and External Factors: Despite the slowdown in sales for COVID-related products, Pfizer maintains its sales forecast of $21.5 billion for Comirnaty and Paxlovid combined for the year. The company anticipates faster sales in the fall, typically when infections rise. Regulators are reviewing an updated version of Pfizer’s vaccine targeting a subtype of the omicron variant. If approved, Pfizer is poised to distribute immediately. Several factors contributed to a revised operational revenue growth projection for the year, excluding Comirnaty and Paxlovid, to 6%-8% from the initial 7%-9%. Some of these factors include limited approval for Pfizer’s prostate cancer medicine Talzenna, subdued U.S. recommendations for a new respiratory syncytial virus vaccine, and significant tornado damage to a factory in North Carolina.

3. Corporate Developments and Strategy: Pfizer is in the midst of finalizing a $43 billion acquisition of cancer drug developer Seagen, with the transaction currently under antitrust review in the U.S. In light of the impending Seagen acquisition, Pfizer has elevated Chris Boshoff to the position of chief oncology research and development officer, placing him in charge of the company's entire cancer drug pipeline. CEO Albert Bourla emphasized that the new structure aims to emulate the effective organizational setup Pfizer previously established for its vaccines R&D.

7 Tips for Managing a Workforce During Uncertain Times

By Jesse Meschuck - CEOs and CHROs began 2023 facing a multitude of exceptional challenges. A weakening economy, a stubbornly tight labor market, persistent inflation, banking instability, war and a new cultural dynamic in which workplace talent is dispersed globally make the job of managing modern workforces exceptionally trying and turbulent. Read Full Article…

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1. Global Business Infrastructure and Talent Hubs: Countries and regions such as India, Mexico, Spain, and Southeast Asia are heavily investing in infrastructures that support international businesses. These areas are offering tax incentives and have established talent hubs with skilled professionals. As a strategy, businesses should consider diversifying their talent and supply chains outside of China, determining work suitable for these talent hubs, and focusing their hiring efforts in these regions.

2. The Importance of Workplace Flexibility: Companies are under pressure to bring employees back to physical offices due to concerns about productivity and company culture. Adopting a flexible work policy can reduce overhead costs, attract and retain talent, and control salary inflation. Utilizing part-time employees, retirees, and contractors can effectively address specific work needs, provide fresh perspectives, and serve as a pool for potential full-time hires in the future.

3. Strategic Workforce Planning and Performance Evaluation: Companies should reevaluate their hiring plans more frequently than annually, given the current volatile environment. CEOs and CHROs should incorporate talent plans when revisiting business strategies, ensuring alignment with evolving business goals. Implementing a rigorous goal-setting process is crucial to identify high-performing employees, and it's essential that reward systems support performance evaluation.

ERISA: The Framework that Stabilizes Employer-Sponsored Insurance

By Protecting Americans’ Coverage Together (PACT) - For nearly 50 years, the Employee Retirement Income Security Act (ERISA) has provided the framework needed to provide a stable employer-sponsored insurance (ESI) system. As the single largest source of health benefits in the United States, ESI provides health coverage for nearly 160 million American workers and their families. ERISA underpins the success of the system, playing an important role to keep employer-sponsored health coverage accessible and affordable. Read Full Article… 

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1. Uniformity and Consistency with ERISA: Employers are in favor of the Employee Retirement Income Security Act (ERISA) because it enables them to provide and manage consistent health plans across different states. Through its preemption clause, ERISA eliminates the complexities posed by varied state laws, ensuring that self-insured employers can offer a standardized set of benefits. This uniformity simplifies administration and ensures employees, regardless of their location, have access to similar health benefits.

2. Efficiency and Cost-Effectiveness: ERISA's framework protects self-insured employers from having to navigate a convoluted mix of state laws. Without this, companies would face challenging administrative burdens, higher costs, and potential legal complications. By overriding state laws, ERISA ensures an efficient health coverage system, preventing employees from experiencing increased costs, decreased access to care, and complexities in their coverage.

3. Flexibility and Future Implications: ERISA allows employers the flexibility to tailor health coverage that best addresses the needs of their workforce, promoting innovative health solutions. Changes to ERISA's foundational provisions, especially its preemption clause, risk introducing extra requirements and costs on both employers and employees. Protecting ERISA's principles is paramount for maintaining an efficient, cost-effective health care system for millions of American workers and ensuring businesses can continue offering optimal health plans in the future.