A Washington federal court judge denied a motion to dismiss by Marsh & McLennan Agency in litigation over the alleged financial mismanagement of a food processing company’s health benefits plan. The judge found that Washington-based Oregon Potato sufficiently alleged Marsh acted as a fiduciary in managing the company’s health plan. The case is Oregon Potato Co. et al. v. Strong et al., Case Number 4:25-cv-05139, U.S. District Court for the Eastern District of Washington.
Oregon Potato claims that Marsh violated the Employee Retirement Income Security Act (ERISA) by using a consulting firm, DWS Holdings LLC, to manage the company’s health plan. The company accuses the defendants, including DWS owner Darrell Strong, of charging excessive fees and mishandling health plan assets.
According to Oregon Potato, Strong recommended in 2023 that the company switch from a fully insured health plan to a guaranteed level-funded premium plan. The arrangement allegedly enabled Strong to collect excessive fees and disadvantaged plan participants, who failed to receive medical benefits for the guaranteed premiums they paid. Management fees topped almost $2 million in 2023, and Strong added on $800,000 in fees in 2024.
Furthermore, when the company moved to terminate the agreement with Strong, it learned that the benefit plan was about $600,000 in debt. Oregon Potato also claims that Strong commingled health plan assets with funds from other clients to keep the plan afloat and improperly withheld about $870,000 in funds designated to pay participants’ medical claims.
Marsh argued in its motion to dismiss that it should not be a party to the suit because its agreement places Oregon Potato in charge of all plan-related decision-making. The agreement also specifically states that Marsh is not a fiduciary of the benefits plan.
In response, Oregon Potato contended that Marsh’s employment of Strong and DWS gave Marsh control over its health plan. In its ruling, the judge sided with Oregon Potato in denying Marsh’s motion to dismiss, pointing out Ninth Circuit precedent holding that an agreement waiving fiduciary responsibilities is invalid if a party acts as a fiduciary as defined by ERISA. As a result, the judge concluded, Marsh’s service agreement did not necessarily insulate it from fiduciary responsibilities or liability, and Oregon Potato had alleged sufficient facts showing that Marsh may have been considered a fiduciary based on its actions in employing Strong and DWS. The court also noted that Oregon Potato presented facts establishing the potential that Marsh had breached its fiduciary duties with respect to excessive fees and to allowing the plan to engage in a prohibited transaction.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
