A federal judge in Chicago has certified a class action lawsuit against UNITE HERE Health, alleging the organization violated the Employee Retirement Income Security Act (ERISA) by improperly shifting administrative costs onto participants in smaller health plan units. The decision was made public.
According to a Memorandum Opinion and Order from the United States District Court, Northern District of Illinois, concerning a class action lawsuit, the plaintiffs, current and former participants of the UNITE HERE Health (UHH) plan, allege that the Board of Trustees of UHH breached its fiduciary duties under ERISA. The plaintiffs argue that UHH overcharged two of its plan units, Units 178 and 278, by disproportionately allocating administrative expenses compared to other units, resulting in excessive costs for those participants.
The court is addressing a motion for class certification, where the plaintiffs seek to certify a class of individuals from Units 178 and 278 who were participants between March 2016 and the present. The plaintiffs claim that UHH’s fiduciary actions—particularly in the allocation of administrative expenses—led to unfairly high costs for participants in these units. They said that UHH unfairly burdened these participants with a larger share of the administrative expenses while Unit 150, a larger unit, received a discount in its allocation.
“Plaintiffs claim that Defendant’s internal allocation of administrative expenses between Plan Units was not reasonably related to the value of services, resulting in fully-insured Units like 178 and 278 paying more in administrative expenses (per participant) than the partially insured Unit 150 despite receiving a lower standard of healthcare benefits,” according to the document.
The court analyzed whether the proposed class meets the requirements under Federal Rule of Civil Procedure 23(a) for class certification, focusing on numerosity, commonality, typicality, and adequacy of representation. It discusses evidence supporting the claims and determines that the class may be certified under Rule 23(b)(3), as common questions predominate over individual ones.
Judge Rebecca R. Pallmeyer is overseeing this case as Chief Judge of the U.S. District Court for the Northern District of Illinois. She became the first woman to lead this court in its history in 2019 after more than two decades on the federal bench. A graduate of Valparaiso University and the University of Chicago Law School, she previously served as a Magistrate Judge and administrative law judge and worked in private practice.
