Legal Review: Lawsuit Seeks to Hold Atrium Health in Violation of Federal Employment Law

By ERISA violation attorney J. Price McNamara of the Law Offices of J. Price McNamara

A lawsuit filed in North Carolina is asking the court to find Atrium Health in violation of federal rules governing retirement and health benefits. The lawsuit, which was filed by five former employees of Atrium, alleges that Atrium has been avoiding its responsibilities to its employees regarding pension funding and has been using its partial ownership of a health insurance company to force its employees to pay more for care, both of which are violations of the Employee Retirement Income Security Act, or ERISA.

The purpose of ERISA is twofold: protect employees by ensuring that certain aspects of employer benefits are subject to disclosure and monitoring by the federal government and providing employers with a set of rules within which to operate without fear of governmental overreaching. ERISA only applies to private entities; governmental entities are exempt from ERISA, the reason being that governmental entities are subject to mandatory disclosure and oversight.

“The two biggest areas where disagreements arise are pensions and health insurance,” said J. Price McNamara, an ERISA Violation attorney with the Law Offices of J. Price McNamara in New Orleans, Louisiana. The lawsuit in question deals with each of those areas.

The first is that because Atrium is subject to ERISA, it has violated the law by underfunding its defined benefit plan by $379 million. Defined benefit plans are better known as pensions; amounts paid by an employer to a retired employee based on years of service, not based upon any amount contributed by the employee.

Additionally, Atrium has failed to purchase insurance for its pension plan through the Pension Benefit Guaranty Corporation, the government entity responsible for administering the pension plans of failed or bankrupt companies, another violation of the law.

Finally, the lawsuit contends that Atrium violates ERISA by requiring five years of service before allowing employees to participate in the pension and retirement plans; entities subject to ERISA can keep employees out no longer than three years.

The second area where the lawsuit claims Atrium to be in violation of ERISA is with regard to health insurance. ERISA prevents most employers from using companies that they own to provide health benefits to employees unless the employer can show to the Department of Labor that the health benefits provider puts the needs of employees first

Atrium offers health insurance coverage through MedCost, which it jointly owns with N.C. Baptist Hospitals. The lawsuit alleges that Atrium used MedCost as a way to ensure that medical expenses could be controlled directly because MedCost would be unlikely to seek rate increases from Atrium and would pass as much of the cost of care onto the patient as possible — as evidenced by comparison with similar plans available in the state.

There is a slight twist in this case. The lawsuit alleges that not only has Atrium violated ERISA, but it did so by falsely claiming that it was a governmental entity, thereby making it exempt from ERISA.

Atrium Health claims that its governmental entity exemption is valid because it was originally a “hospital authority”. Hospital authorities have some statutory recognition in North Carolina as being governmental entities under a 1997 statute that recognized the ability of a county to assign to any hospital authority created prior to 1997 the power to provide public health services.

Whether Atrium will fall under this exception remains to be seen; however, the claims put forth by the Plaintiffs raise interesting questions that must be litigated before we can get a better understanding of how North Carolina’s laws will line up with ERISA.

If you believe that your rights to benefits as an employee have been violated by your employers’ actions, do not wait to contact an experienced ERISA Violation Attorney. Issues related to ERISA are complex and require a deep understanding of the federal rules and regulations. Contact a Louisiana ERISA Violation Attorney today to fight for the compensation you deserve.

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