CEOs/HR Execs Facing Personal Liability: Dereliction of Fiduciary Duties Triggering Labor Dept Investigations

Dave Chase | LinkedIn | September 30, 2016

The first shots across the bow have been fired highlighting how benefits leaders need to pay as close attention to health benefits as they have been paying to retirement plans. The most recent lawsuits name the HR leaders in the companies involved (GAP and CB&I) as defendants since they are listed as the plan administrator (sometimes CFOs are the plan administrators). It’s clear that there is going to be the increased scrutiny for health benefits that has been commonplace for retirement benefits. For example, you can Google “ERISA class action” to find the many cases surrounding retirement benefits going after plan administrators for failing in their fiduciary duties. Similar cases in healthcare could have as far-reaching implications as Obamacare in driving employers to health benefits that deliver value.

This shouldn’t be a surprise in light of the fact that employers commonly spend two and a half times more on health benefits than on retirement benefits. Employers typically have extremely rigorous oversight of retirement benefits with independent investment committees, regular audits and more. Though the same fiduciary responsibility exists for health benefits, evidence suggests that the vast majority of employers have fallen short. After all, we’ve seen how straightforward it has been for employers large and small to spend 20-55% less per capita on health benefits with benefits superior to what 99% of the workforce gets. If a tech entrepreneur/CEO who isn’t a benefits professional (me) can readily find proven solutions (now captured in the Health Rosetta) that have been implemented in small/medium/large employers, school districts and municipalities, it points out that the biggest lie in healthcare is that it’s not possible to control healthcare costs.

Forward-looking benefits consultants have the opportunity to become a charter member of the Health Rosetta Benefits Professional Certification (scroll down to view in the right hand column). This will differentiate them from their peers and open up new and different arrangements where their financial interests become aligned. Today, there is frequently a conflict of interest given perverse financial arrangements with health plans they offer to clients. It's simply a matter of time before employers will seek out benefits consultants with certifications of this nature. Employers can take advantage of the Health Benefits 2nd Opinion to ensure they aren't missing opportunities to save millions.