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Top business group urges court to nix ‘multi-plan’ benefits class action

The United States Chamber of Commerce building is seen in Washington, D.C., U.S., May 10, 2021. REUTERS/Andrew Kelly

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  • Group says plaintiffs can only sue over plans they invest in
  • Plan administrator appeals certification of 300,000-member class

(Reuters) – The U.S. Chamber of Commerce has asked a federal appeals court to decertify a class of nearly 300,000 participants in 3,300 employee benefit plans administered by Plan Benefit Services Inc, saying a ruling in their favor “risks massive disruption.”

The Chamber, the largest U.S. business group, filed an amicus brief on Wednesday urging the 5th U.S. Circuit Court of Appeals to rule that plaintiffs cannot bring claims under the federal employee benefits law that involve plans in which they are not participants.

Plan Benefit Services and its parent, Fringe Benefit Group, are appealing the certification of a class in a 2017 lawsuit accusing the company of charging excessive administration fees.

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The class members are employed by more than 2,000 companies, but the three named plaintiffs all work for the same Texas construction company and are participants in a single benefit plan.

The Chamber said that under the federal Employee Retirement Income Security Act of 1974 (ERISA), plaintiffs only have standing to sue over fees charged by plans in which they participate.

“The decision below risks massive disruption to the individually negotiated arrangements of thousands of benefit plans that are overseen by their own fiduciaries and invites further litigation against service providers to dismantle considered fiduciary choices,” the group said.

Lawyers for the plaintiffs did not immediately respond to requests for comment. Neither did Plan Benefit Services.

In certifying the class in March, U.S. District Judge Lee Yeakel in Austin, Texas concluded that the plaintiffs had standing because Plan Benefit Services acts as a fiduciary to all class members.

Plan Benefit Services in its appeal says Yeakel failed to account for the variety of fee structures employed in the thousands of different plans, which makes the class action untenable.

The company in a brief filed last week said that, for example, the plan covering the named plaintiffs charges a 0.2% administrative fee for assets over $900,000. By contrast, a different construction firm’s plan charges a fixed monthly fee regardless of asset levels, according to the brief.

The case is Chavez v. Plan Benefit Services Inc, 5th U.S. Circuit Court of Appeals, No. 22-50368.

For the plaintiffs: Nina Wasow of Feinberg, Jackson, Worthman & Wasow

For Plan Benefit Services: James Matthew Dow of Jackson Walker

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Our Standards: The Thomson Reuters Trust Principles.

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