Two former Northwestern employees filed a class-action lawsuit against the University on June 20, alleging that NU’s employee health plan includes a more expensive “premium” option that does not provide any additional benefits for those insured.
According to the filing, which was made by the former employees on behalf of those “similarly situated,” the University offers three different tiers of healthcare coverage for those with full-time contracts, which varied in cost, while providing the same level of care.
In 2018, the University established its employee welfare benefit plan, which allowed participants to choose a preferred provider organization from three different tiers, ranging from a “premier” provider with the lowest deductibles and highest premiums, to a “value” provider, which offered the opposite.
The plaintiffs allege that employees who opted for the premium plan paid more money out of their paychecks for no added value.
As a result, the filing alleges that NU is in violation of the Employee Retirement Income Security Act, a piece of 1974 federal legislation designed to protect employee benefits in private-sector workplaces.
According to the suit, the University knew that its high-cost plan offered no greater incentives, but failed to inform its employees, instead misleading them into overpaying for coverage.
The filing also alleges NU did not provide proper oversight of those managing the plan, something plaintiffs view as a further shortfall of its “affirmative obligation” to communicate information crucial to beneficiaries.
The filing comes just 10 days after University President Michael Schill cited litigation expenses as one factor putting an “increasing strain” on the University’s finances in a statement to the NU community.
On behalf of all full-time employees enrolled in the premium PPO since 2019, the suit seeks reimbursement for all affected employees as well as an injunction to prevent future violations.
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