INSURANCE-RELATED COURT CASES
Digested from case reports published online
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Current and former employees of Ring-Central participated in RingCentral’s employee welfare benefits plan. The plan participated in the “Tech Benefits Pro-gram” administered by Sequoia Benefits and Insurance Services, LLC, a management and insurance brokerage company. The Tech Benefits Program was a MEWA(multiple employer welfare arrangement) that pooled assets from employer-sponsored plans into a trust fund for the purpose of obtaining insurance benefits for employees at large-group rates.
The plaintiffs filed this putative class action on behalf of the RingCentral plan and other Tech Benefits Program participants, asserting that Sequoia owed fiduciary duties to the plan under ERIS A because Sequoia allegedly exercised control over plan assets through its operation of the Tech Benefits Program. The plaintiffs alleged that Sequoia violated its fiduciary duties by receiving and retaining commission payments from insurers, which the plaintiffs regarded as kickbacks, and by negotiating allegedly excessive administrative fees with insurers, leading to higher commissions for Sequoia.
The Ninth Circuit affirmed the district court’s dismissal for lack of Article III standing as stipulated in the California constitution. The court held that the plaintiffs failed to establish Article III standing as to either of their two theories of injury. The panel held, as to the out-of-pocket-injury theory, that the plaintiffs failed to establish the injury in fact re-quired for Article III standing because their allegations did not demonstrate that they paid higher contributions because of Sequoia’s allegedly wrongful conduct. And the plaintiffs failed to plead the third element, that their injury likely would be redressed by judicial relief.
Rachael Winsor, et al. v. Sequoia