The U.S. Department of Labor (“DOL”) recently entered into a settlement agreement with a New York-based insurer and third-party administrator (“Company”) of employer group health plans governed by the Employee Retirement Income Security Act (“ERISA”).

According to the DOL, an investigation by its Employee Benefits Security Administration (“EBSA”) found the Company allegedly used cross-plan offsetting to recoup overpayments made to healthcare providers under one or more employment-based health plans. The DOL alleged that the Company simply recouped those overpayments by subsequently withholding other payments owed to those same health-care providers for healthcare expenses incurred by participants covered under other health plans that were sponsored by completely different employers. The DOL alleged this practice violated the Company’s ERISA fiduciary duties as the Company benefitted at the expense of the group health plans and their participants by wrongfully retaining assets from one health plan for a debt allegedly owed by another, different health plan.

The DOL further alleged that the Company’s cross-plan offsetting practice also put participants at risk of being balance billed for wrongfully offset claims.

As a result of the above allegations, the Company and the DOL recently entered into a settlement agreement under which the Company agreed to discontinue cross-plan offsetting with respect to ERISA-covered health plans and make whole all workers and their families who were harmed by its cross-plan offsetting practice. This will involve reimbursing affected persons for out-of-pocket costs, including any fees, penalties, or interest, as appropriate. The Company also has to reasonably determine whether any participants were balanced billed in making them whole.