‘Avalanche’ of ERISA Lawsuits Could Follow Supreme Court Decision
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May 09, 2025
The U.S. Supreme Court’s recent decision in an Employee Retirement Income Security Act (ERISA) case could open employers and health plan fiduciaries to a flood of new ERISA lawsuits, experts tell AIS Health, a division of MMIT.
In the Cunningham v. Cornell decision, handed down April 17, the court unanimously ruled that plaintiffs can bring prohibited transaction claims without noting the exemptions, as those are up to defendants to plead and prove.
Under ERISA section 406 (a) (1) (C), payments that ERISA-covered plans make to a service provider that could benefit that provider are prohibited transactions. The idea, generally, is to prevent self-dealing and protect plan participants and beneficiaries from conflicts of interest. Section 408 describes exceptions to this, including paying a party in interest reasonable compensation for necessary services.
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