UNITE HERE Health is currently facing a certified class action lawsuit alleging violations of the Employee Retirement Income Security Act (ERISA). The lawsuit claims that trustees imposed disproportionately high administrative costs on smaller plan units. This decision was posted by a federal judge with the U.S. District Court for the Northern District.
According to court documents, Judge Rebecca R. Pallmeyer has certified this class action lawsuit against the Board of Trustees of UNITE HERE Health. This certification allows over 7,500 participants from Plan Units 178 and 278 in California to pursue claims that they were unfairly overcharged for administrative expenses. The lawsuit alleges these units paid significantly more per participant than others due to how administrative costs were distributed.
Court documents further reveal that from 2016 to 2023, participants in Plan Units 178 and 278 were assessed administrative costs ranging from $1,014.82 to $2,152.80 per person, compared to $529.36 to $805.84 for participants in Unit 150, known as the Las Vegas-based Culinary Health Plan. This disparity is partly attributed to a policy that discounts Unit 150’s contributions for administrative costs, thereby forcing other units to shoulder a disproportionate share despite receiving fewer benefits.
The plaintiffs argue that UNITE HERE Health's trustees breached their fiduciary duties not only by allocating expenses unfairly but also by incurring excessive administrative costs overall. Their analysis, using Department of Labor data, suggests the fund spent over $72 million more than the average for comparable self-insured plans and $235 million more than partially self-insured plans.
"Because Unit 150’s administrative expense burden is greatly reduced, every other unit (including Units 178 and 278) must pick up the slack and pay an amount of administrative expenses disproportionate to their relative size (in terms of contributions) in the fund," according to a memorandum provided by the court.
Judge Pallmeyer serves as the Chief Judge of the U.S. District Court for the Northern District of Illinois and became its first female leader in 2019 after more than two decades on the federal bench. According to information from the district court's website, she graduated from Valparaiso University and the University of Chicago Law School and previously served as a Magistrate Judge and administrative law judge before working in private practice.