Voluntary Benefits Suits Emerge as New ERISA Battleground

ERISA Litigation attorney Lindsey Camp was quoted in a Law360 article recapping a new crop of class action lawsuits targeting employers' insurance-related voluntary benefits offerings. Plaintiffs in these cases allege companies violated the Employee Retirement Income Security Act of 1974 (ERISA) by allowing insurance brokers to make excessive commissions off the premiums workers pay for these benefits – even those brokers provide the same benefits to other employers without charging commission fees. U.S. Department of Labor (DOL) regulations provide a safe harbor to prevent litigation against certain types of voluntary benefits insurance policies, but Lindsey cautioned against "a knee-jerk reaction to the lawsuits" even though the trend represents a wake-up call for management.

"I think employers need to take a step back and look at whether they want the plan to be treated as an ERISA plan, and walk through the pros and cons of that," she told Law360. "What makes sense for your company? Do you want the voluntary benefit programs to be treated as an ERISA-governed plan or not? And then your actions flow from there, and that's how you minimize liability."

Lindsey also predicted inconsistent results at the motion to dismiss stage and indicated summary judgment orders will provide "more meaningful guidance" on the benchmarks for determining whether a plan is governed by ERISA and consequently implicates fiduciary duties.

"All employers can do right now is make sure that what they're doing is in line with what they want to be doing," she said.

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