Several recent developments have highlighted ERISA fiduciary obligations in the context of health and welfare plans. First, transparency legislation has made group health plan data, such as network pricing and service provider compensation, more readily available to fiduciaries. Second, numerous class action lawsuits have been initiated against group health plan fiduciaries, alleging breaches of various ERISA fiduciary obligations (in many cases, for a failure to utilize the newly available data). Third, regulators have focused more on health and welfare plan compliance; previously, such attention was largely directed at retirement plans. These developments are explained further in the following section entitled, The Background: Recent Developments Impacting Group Health Plan Fiduciary Governance.
ERISA group health and welfare plan sponsors, administrators, and other plan fiduciaries have always been required to adhere to a fiduciary code of conduct that involves duties of loyalty, impartiality, and prudence. Recent events underscore that it is crucial for sponsors of group health and welfare plans to review their fiduciary governance structures and practices to ensure they are fulfilling their plan obligations and thus minimizing related risks and potential liabilities to their organizations.
This publication provides a refresher on ERISA fiduciary duties and outlines effective governance structures and prudent governance practices. Emphasis is placed on procedural prudence, which is central to the successful fulfillment of ERISA fiduciary responsibilities. The publication includes practical examples, self-check questions, and appendices with a high-level checklist and sample documents to assist fiduciaries in understanding and fulfilling their obligations in an increasingly complex and dynamic employee benefits environment.
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