DOL Sues Macy's Inc. Health and Welfare Plan

Alleging SPD and Wellness Program Failures

On August 16, 2017, the Department of Labor (“DOL”) filed a lawsuit against Macy’s Inc. Health and Welfare plan (and its third party administrators) under ERISA Title I.

Specifically, the complaint alleges:

• The health plan and its fiduciaries failed to follow the written terms of the health plan’s Summary Plan Description (SPD) when reimbursing out-of-network claims; and

• The wellness program that includes a tobacco surcharge violated the HIPAA wellness program rules.

The complaint alleges breach of fiduciary duty and asks, in part, for readjudication of all out-of-network claims administered outside plan terms and for restitution of all the tobacco surcharges imposed.

Failure to Amend SPDs

According to the DOL’s complaint, Macy’s changed the reimbursement threshold for out-of-pocket claims from “the lesser of the provider’s normal charge for a similar service or supply or between 75%-80% of usual and customary charges” to the Medicare Allowable Rate when it is less than the provider’s normal charge for a similar service or supply. Allegedly, the SPD was not amended to include language describing that the reimbursement for out-ofnetwork claims would be the Medicare Allowable Rate when less than provider’s normal charge. Additionally, the health plan participants were not provided a copy of any summary of material modification reflecting the change in reimbursement.

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