Vitori Voice

Categories | Subscribe | Popular

Looming Employer Litigation: Is J&J the Canary in the Coal Mine?

3 min

There is looming fiduciary litigation risk for employers who continue to passively patronize the legacy insurance and PBM industry with its long, public history of predatory practices. Johnson and Johnson leaders who were individually-named fiduciaries in a recent class action lawsuit can attest to this.

ERISA was designed to protect the interests of employee benefit plan participants by establishing standards of conduct, responsibility, and obligation for employer health plan fiduciaries. When mismanagement occurs, it empowers employees with “appropriate remedies, sanctions, and ready access to the Federal courts.”

Such empowerment is now playing out in a New Jersey federal court. On February 5, 2024, an explosive class action complaint was filed against Johnson and Johnson, its Pension & Benefits Committee, and individually named fiduciaries. It accuses Johnson and Johnson of breaching its fiduciary responsibilities by failing to negotiate lower prescription drug prices and burdening employees with millions of dollars in overpayments for generic drugs.

Manipulating Rx Drug Plans to Maximize Profit

As stated in the complaint, the federal Employee Retirement Income Security Act of 1974 (ERISA) requires employer health plan fiduciaries “to make a diligent and thorough comparison of alternative service providers in the marketplace, to seek the lowest level of costs for the services to be provided, and to continuously monitor plan expenses to ensure that they remain reasonable under the circumstances.”

The plaintiffs assert that Johnson and Johnson did not comply to the extent required by ERISA, and that the firm failed to engage in a prudent and reasoned decision-making process, specifically regarding prescription drug costs. According to the complaint,

“Defendants agreed to make the plans and their beneficiaries pay, on average, a markup of 498% above what it costs pharmacies to acquire those drugs…roughly 6 times as much as the PBM (or a PBM-owned pharmacy) paid for those very same drugs.”

The lawsuit exposes the predatory practices of traditional PBMs and how they conflict with ERISA’s goals and a fiduciary’s responsibilities: “No prudent fiduciary would agree to make its plan and beneficiaries pay a price that is two-hundred-and-fifty times higher than the price available to any individual who just walks into a pharmacy and pays out-of-pocket.”

What Role Do Brokers Play?

Organizations rely on brokers and Employee Benefit Consultants (EBCs) for key guidance in choosing plans that are wholly “for the exclusive benefit of participants in the plan.” It is an unfortunate truth, however, that some EBCs participate in these unethical PBM schemes for their own enrichment while purporting to act in the best interest of their clients.

EBCs are sometimes paid by PBMs in ways that incentivize them to act against the plan’s interest. For example, PBMs may promise a commission on every prescription if the EBC recommends the PBM to its clients.

Employer health plan fiduciaries cannot simply rely on the advice of third-party service providers, consultants, or experts, especially those who have conflicts of interest that may prevent them from providing advice solely for the benefit of the plan. While they can take their suggestions into account, fiduciaries must exercise independent, prudent, and impartial fiduciary judgment on all matters for which they receive advice from EBCs.

An Ethical Approach to Choosing a Health Plan

As demonstrated by the Johnson and Johnson lawsuit, plan participants may seek injunctive and equitable relief from fiduciaries who breach their responsibilities. Brokers and EBCs can take an active role in protecting their clients from legal action by offering principled solutions that avoid conflicts of interest and solely benefit plan participants.

“If Defendants had engaged in a prudent and reasoned decision-making process, they would have known of, and adopted, any of numerous options that…would have resulted in…cost savings for the plans and their beneficiaries. Implementing those available options would have saved the plans and their beneficiaries millions of dollars over the proposed class period.”

There is a multi-year pattern of legacy insurance carriers and PBMs failing to put the interests of employer plan sponsors and plan beneficiaries ahead of profits. Employer fiduciaries who continue to engage these underperforming entities when alternatives are clearly available do so at growing legal risk. Vitori Health eliminates this risk with member-first, industry-leading health plans that reduce overspending by up to 30%, transparent VitoriRx lowest net cost pharmacy administration, and a remarkable member experience.

Vitori Health Welcomes Art Hoath, IV as Chief Revenue Officer

< 1 minute

We are excited to announce that Art Hoath, IV has joined Vitori Health as Chief Revenue Officer. With his sustained focus on bringing value and innovation to employer health plan sponsors, Art is an excellent addition to the Vitori Health team and a strong advocate for Vitori’s mission to lower health plan costs and improve member support.

Art brings over 20 years of experience in the healthcare and self-funded employer health plan arena. He has successfully led high-powered sales teams and helped launch and grow innovative solutions for leading healthcare cost containment companies.

Art looks forward to promoting Vitori’s modern health plan and Vitori Vantage, the industry’s first 3-year level funded product, which deliver unmatched cost control and a remarkable member experience over outdated insurance plans.

“I joined the Vitori Health team because of their compassionate and impactful approach to solving the real healthcare needs of employers and their people,” says Art. “The continued success of Vitori’s innovative health plans gives our broker partners a winning hand to drive better outcomes for their clients and grow new business.”

Tim O’Brien, Vitori Health CEO, says, “I have every confidence that Art’s sales leadership will further accelerate our continued, rapid growth. Art’s solid industry experience will enhance our existing broker relationships and help us build new business partnerships.”

No Raises in 2024? Find Money to Stay Competitive and Keep Employees Happy

< 1 minute

Economic factors are turning 2024 into a potentially rough year financially for employees. Healthcare costs are expected to rise and employers are planning to scale back on raises and promotions, with many not even planning on a cost-of-living increase.

This double whammy will effectively reduce employee net compensation and disposable income. Despite the downside for retention, many employers seem willing to take this risk. Key findings of a recent survey of 600 business leaders revealed:

  • 26% of companies will not or may not give raises next year
  • Half of companies giving raises say less than half of employees will receive one
  • 52% of business leaders anticipate layoffs in 2024

Employers need to do everything possible to ensure their compensation and benefits packages remain competitive. Offering a member-first health plan from Vitori Health is a smart strategy for achieving cost control and employee retention goals.

  • Vitori Vantage, the industry’s first 3-year level premium health plan, eliminates the unpredictability of rising annual healthcare expenses. Vantage stabilizes cash flow and helps employers budget for strategic workforce investments.

Employers tethered to legacy insurance carriers with uncontrolled healthcare costs are giving up competitive advantage with fewer options for improving employee pay and benefits. It’s time to take a modern approach to employer sponsored healthcare that boosts employee satisfaction while successfully reducing plan costs.

How to Beat Fully-Insured Employer Health Plans That Deny Care

< 1 minute

It is abundantly clear that employers need to break free from fully-insured health plans with legacy insurance carriers. Premiums spiral higher with every renewal, and employees and their families are increasingly exposed to devastating denials of care and coverage… all in the pursuit of greater profit.

Despite laws to the contrary, insurers create the illusion of coverage while finding loopholes to avoid providing actual care. In its series on how the insurance industry routinely denies coverage to patients, ProPublica exposes the system’s inner workings and how it harms the people it purports to help.

For one patient, denial of cancer care had tragic results that sadly, could happen to any employee covered by a traditional, fully-insured health plan. The good news is that employers can break free from this profit-driven corruption by moving to a self-funded or 3-year level-funded health plan from Vitori Health.

Vitori removes the risk of legacy plans that cede all power to the insurance company by providing greater control over coverage and care. It also offers upwards of 30% in savings and includes low and no-cost care options to covered members.

Employers can provide real health care coverage to their valued employees.

When Did a Trip to the Hospital Become an Adventurous “Journey?”

2 min

In the latest whitewashing of our ever-more costly healthcare system, hotel-like hospitals with “therapeutic art collections” and haute cuisine are touted as “better for healing.” The notion that “sickness is a journey” is often taken at facilities that invest more in luxury amenities than clinical quality.

Elisabeth Rosenthal, senior contributing editor at KFF Health News, shares her personal reflections on how rebranding illness as an adventure is harmful, irresponsible, and deceptive. Does anyone really equate their “cancer journey” to an Abercrombie & Kent safari? Calling patients “guests” and “customers” doesn’t change their struggle to get quality, affordable healthcare from hospitals facing tight budgets, staffing shortages, and professional burnout.

Sadly, “researchers at the National Bureau of Economic Research estimated that a hospital investing in amenities would increase demand by 38%, whereas a similar investment in clinical quality would lead to only a 13% increase.” Absent in this is what patients, employers, and society would really like to see hospitals and health systems compete aggressively on: the cost of care.

An honest analysis shows that luxury hospital “amenities have a cost, and they are not worth nearly what we’re paying for them as we’re billed for $100,000 joint replacements and $9,000 CT scans. Room charges in many hospitals can exceed $1,000 a night. And ‘facility fees’ for outpatient procedures and even office visits can reach hundreds of dollars, and simply don’t exist elsewhere.”

“For the amount that American patients (or their employers and insurers) pay for some luxury hospital journeys, they could sign up for a Virgin Galactic suborbital joy ride.”

Let’s Get Real.

Being sick is not an adventure. “A hospital’s function is to diagnose and to heal, at a price that sick people can afford.” “Instead of providing free coffee and a piano in a soaring, art-filled marble lobby, how about focusing on the very basic things that health systems in the U.S. should do, but…in many cases do not.”

Healthcare costs are projected to rise significantly in 2024, impacting employers and members alike. A modern health plan from Vitori Health delivers needed cost controls, quality care, and a remarkable member experience. Employers needing stable cash flow and predictable budgeting can find relief with Vitori Vantage, an industry-first, 3-year level premium health plan.

$2,885 Average Savings Per Employee with NO Cost Shifting | Estimate Your Savings

X