Lawsuit challenging employer health plan options survives motion to dismiss

A pending lawsuit against Northwestern University and its health plan fiduciaries raises novel claims that could be problematic for employers that offer multiple medical benefit options if the court’s recent denial of Northwestern’s motion to dismiss gains traction. 

Lower deductibles don’t outweigh higher premium

The lawsuit, Barbich v. Northwestern University, alleges that the plan’s fiduciaries violated the Employee Retirement Income Security Act of 1974 (ERISA) and breached their fiduciary duties by offering employees a medical plan option that provided insufficient value compared to an alternative option offered to employees. 

The suing employees allege that the “premium” plan option that charges higher premiums in exchange for lower deductibles and cost-sharing is financially dominated by the “value” plan option because the lower cost sharing doesn’t sufficiently outweigh the higher premium.

Court declines to dismiss