The US Supreme Court recently agreed to review the Eighth Circuit’s decision in Thole v. US Bank, in which the Eighth Circuit held that participants in an overfunded defined benefit pension plan lack standing to sue for fiduciary breaches under ERISA. The Supreme Court’s decision in this case—the third ERISA case accepted by the court this term—could have significant implications for plan sponsors and plan fiduciaries. Many believe that if the Supreme Court rules that the plaintiffs have standing to bring suit, it could encourage a proliferation of litigation against plans where there is no actual impact on participants’ benefits.
A recent Eighth Circuit decision regarding “cross-plan offsetting” serves as an important reminder of how ERISA’s fiduciary duties impact both employers and fiduciaries who handle claims.
The case involved the common practice of cross-plan offsetting, which occurs when a claims administrator resolves an overpayment to a provider by refusing to pay that provider for a future claim (or reducing the amount paid for that future claim)—even if the latter claim was made by a participant in an unrelated plan. Cross-plan offsetting allows claims administrators to quickly recover overpaid benefits without the time and expense associated with one-off recovery actions against providers. Defendant UnitedHealth Group (UnitedHealth) initially applied this practice among its in-network providers, but then expanded cross-plan offsetting to non-network providers beginning in 2007. This practice was challenged by two out-of-network doctors in the case at issue, Peterson v. UnitedHealth Group, Inc.
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