By: Christopher A. Parrella, Esq., CPC, CHC, CPCO Parrella Health Law, Boston, Ma. A Health Care Provider Defense and Compliance Firm

As health care costs soar and transparency dwindles, employers and unions across the U.S. are taking matters into their own hands, filing lawsuits against major health insurers over what they claim are excessive fees, opaque billing practices, and restrictive data access. This mounting wave of litigation reflects a profound frustration with health insurers who, according to plaintiffs, have allowed health care costs to spiral unchecked, knowing the burden ultimately falls on employers, employees, and union members.

Rising Costs and Employers’ Breaking Point

The cost of health coverage has skyrocketed in recent years, pushing many employers and unions to a breaking point. According to the Kaiser Family Foundation, the average cost of family health coverage hit $22,000 in 2022—a figure that is only expected to rise. Employers typically respond to these relentless increases by either raising deductibles, which pushes more costs onto employees, or by increasing workers’ contributions to their health plans, both of which have a direct impact on take-home pay.

As costs continue to mount, companies are turning to the courts as an alternative approach to controlling health spending. Rather than accept higher premiums or out-of-pocket costs for employees, some employers are seeking a legal recourse, arguing that insurers’ practices contribute to excessive health costs.

The Lawsuits: A Look at Key Cases

Several lawsuits illustrate the extent of employer frustration and the alleged abuses by insurers:

1. Mars, Inc. vs. Aetna and Optum: A landmark class-action lawsuit has moved forward, with Mars, Inc., a self-insured employer, claiming that Aetna, working with subcontractor Optum, created “dummy codes” to bury administrative fees in claims data. Mars asserts that these hidden fees led to substantial overcharges for its employees’ health plans.
2. Ford vs. Blue Cross Blue Shield (BCBS) of Michigan: Ford Motor Company is suing BCBS of Michigan and other BCBS plans, accusing them of price-fixing and colluding to inflate health care costs. Ford claims these Blues plans operate as a cartel, dividing territories and fixing prices to stifle competition. This lawsuit, which mirrors an ongoing antitrust suit against the BCBS network, underscores Ford’s frustration with the insurer’s pricing strategies.
3. Connecticut Unions vs. Elevance Health: Unions representing Connecticut laborers filed a lawsuit against Elevance Health, a BCBS insurer, alleging that it restricted access to claims data and deliberately overcharged the unions by not applying contracted discounts. In one instance, the unions paid $8,700 for a hospital claim that should have cost around $5,600—meaning they were charged thousands more than the negotiated rate.

These cases underscore a core issue: self-insured employers depend on health insurers, acting as third-party administrators (TPAs), to negotiate fair prices with providers. However, as TPAs assume no financial risk, critics argue they have little incentive to push back on excessive provider charges, leaving employers—and ultimately employees—to bear the brunt.

The Transparency Problem: Access to Claims Data

Many lawsuits emphasize that insurers often block access to the very data employers need to understand their costs. This restriction makes it nearly impossible for companies to scrutinize health plan expenses and manage spending effectively. Under the Employee Retirement Income Security Act (ERISA), self-insured employers are responsible for acting as fiduciaries, meaning they must safeguard the health plan’s assets. Without access to claims data, employers argue they are unable to fulfill their fiduciary duties—a situation that has prompted many to press for greater transparency.

Recent changes to ERISA, which now ban “gag clauses” that prevent employers from accessing data on pricing and provider quality, could increase the number of these lawsuits. Employers now have a clearer pathway to secure the data they need and hold insurers accountable for contract terms, making it harder for insurers to operate without scrutiny.

ERISA Fiduciary Duty and the Push for Accountability

The lawsuits against Elevance Health, Aetna, Optum, and BCBS illustrate a larger, systemic issue: insurers who serve as third-party administrators for self-insured employers often don’t have an incentive to secure the best rates. As a result, employers are left covering inflated costs that stem from misaligned incentives. By bringing these cases to court, employers are challenging the lack of accountability and pressing insurers to act in alignment with employers’ financial interests, not just their own.

The Path Forward: What Employers Should Do

As these cases continue to unfold, employers should consider reviewing their contracts with TPAs and pushing for greater transparency. Employers may want to negotiate stronger clauses requiring data access, regular audits, and adherence to negotiated rates. Additionally, employers can consider options like direct contracting with providers to reduce reliance on insurers and establish more competitive pricing.

If you are an employer or a union representative concerned about inflated health care costs and lack of transparency in your health plan, Parrella Health Law is here to help. Our firm can guide you through contract reviews, assist with legal action when necessary, and ensure you have the information needed to make informed decisions about your health plan’s future. For assistance, contact us at 857-328-0382 or reach out to Chris directly at cparrella@parrellahealthlaw.com.