ERISA and the Failure of Employers to Perform Their Fiduciary Duties: Evidence from a Survey of Health Plan Administrators.

Abstract

Employers purchase health benefits for more than 60% of the nonelderly population, making employers both important custodians of employee well-being and important actors in the health care ecosystem. Because employers typically have unilateral control over health and retirement benefits, the federal Employee Retirement Income Security Act (ERISA), enacted in 1974, imposes fiduciary obligations on employers when they manage or administer benefits. We provide evidence, from a novel survey of respondents who administer or oversee health benefits for their companies, that many employers appear to neglect even the most basic of their fiduciary obligations to their employees. This neglect may help explain the poor performance of employer plans in controlling costs and providing access to health care, and it suggests that many employers may be vulnerable to liability from ERISA lawsuits.