11 August 2022

Federal Court Approves BCBSA $2.67 Billion Settlement, Acknowledges Importance of ERISA Fiduciary Duties

On August 9, 2022, a federal court approved the proposed $2.67 billion settlement in a recent antitrust class action lawsuit filed against the Blue Cross Blue Shield Association (“BCBSA”).  (See our previous client alert discussing the proposed settlement here.)  The approval order means that employers who submitted valid claims are one significant step closer to receiving their settlement proceeds.

However, payments from the settlement fund will only be made after any appeals—if filed—are resolved.  And notably, some prominent employers, including the Home Depot, could appeal the approval order.  Interested employers should check the Blue Cross Blue Shield Settlement Website for updates.  Additionally, employers that expect to receive settlement proceeds should be aware of the potential ERISA fiduciary duty issues related to the proceeds.

Eligible Employers

As you may recall, the following employers had until November 5, 2021 to submit a claim to the settlement fund:

  1. Employers who purchased an insured group health policy from a BCBSA licensee from February 7, 2008 through October 16, 2020; and
  2. Employers who purchased administrative services for a self-funded group health plan from a BCBSA licensee from September 1, 2015 through October 16, 2020.

ERISA Fiduciary Duties

Employers who made a claim should be aware that they may have fiduciary duties under ERISA with respect to the use of any proceeds from the settlement fund.  In its approval order, the court acknowledged the importance of these fiduciary duties under ERISA.  Specifically, the court stated that all ERISA fiduciaries must comply with those duties, and the settlement does nothing to change or alter ERISA rights.  Additionally, the court acknowledged that while the settlement funds are not “plan assets” at the time of their distribution, the Department of Labor (“DOL”) may take the position that some of those settlement funds are “plan assets” after distribution.

Under ERISA, any portion of the settlement proceeds that are considered to be “plan assets” must be used for the exclusive benefit of participants in the plan (and their beneficiaries), or to defray the reasonable administrative expenses of the plan.

To date, the DOL has not issued any guidance regarding the proper treatment of claim proceeds from this particular lawsuit.  However, the DOL has previously issued guidance related to the treatment of medical loss ratio (“MLR”) rebates received under the Affordable Care Act.  Unless specific guidance is issued related to the BCBSA settlement, employers may want to use the MLR guidance as a reference when determining how to calculate what portion of the BCBSA settlement proceeds should be considered “plan assets,” and how those funds can be used.  We discussed the existing MLR guidance in-depth in our previous client alert on the BCBSA settlement, which is available here.  We are also available to assist employers determine how the existing MLR guidance or any upcoming DOL guidance may apply to their specific situations.

If you have any questions, please contact one of the authors or another one of the Miller Johnson employee benefits attorneys.