Navigating the Complex Landscape of Healthcare Compliance: A Closer Look at Lawsuits and the CAA 


In 2023, the healthcare industry found itself at a critical juncture, marked by the emergence of 17 issued or pending lawsuits centered around non-compliance by payers, providers, and employers. This alarming trend serves as a stark indicator that the challenges posed by regulatory changes are not dissipating but intensifying. At the heart of this legal storm is the Consolidated Appropriations Act (CAA), which mandates employers to function as fiduciaries, closely monitoring healthcare expenses and ensuring fair compensation for service providers.


Two lawsuits have already emerged as pivotal points of reference, offering a glimpse into the possible trajectory of future litigation. In Connecticut, labor unions have taken Elevance Health (formerly Anthem) to court, alleging a breach of fiduciary responsibilities. The accusation revolves around Elevance’s denial of access to claims data and charging self-funded plans higher rates than negotiated with hospitals. The outcome of this case is anticipated to set a precedent for future litigation, shedding light on the consequences that may unfold in similar scenarios.


Meanwhile, in Florida, the Osceola School District engaged in legal action against Gallagher, a prominent benefits brokerage. The lawsuit, settled in January 2023, accused Gallagher of breaching its contract by concealing “secret commissions.” Though the case is now resolved, it remains unclear how it might influence future litigation and regulatory changes stemming from the CAA.


These lawsuits represent a potential tipping point, opening the door for additional legal challenges. Early cases have demonstrated the propensity to target brokers, consultants, and health plans. Employers face the risk of litigation if employees assert a failure to fulfill fiduciary responsibilities. Other stakeholders, including Pharmacy Benefit Managers (PBMs) and vendors, may also find themselves accused of withholding data crucial for employers to meet their fiduciary obligations.


The Elevance case is being closely monitored as a litmus test for the severity of repercussions in healthcare litigation. While the Gallagher case has concluded, it has already set a precedent for employers pursuing legal action against brokers and consultants. The industry anticipates that future cases may unfold with even more dramatic consequences.


As the healthcare landscape navigates the intricate terrain of compliance, employers are urged to proactively address fiduciary responsibilities, keeping a watchful eye on legal developments. The outcome of ongoing lawsuits will undoubtedly shape the future of healthcare compliance, influencing how employers, service providers, and other stakeholders operate in this ever-evolving regulatory environment. The time for action is now, as the industry braces itself for potential shifts and seeks to establish best practices in the face of mounting legal challenges.

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