What the Tiara Yachts Ruling and EBSA Enforcement Data Reveal About the Gap Between TPA Accuracy Promises and Fiduciary Reality

In fiscal year 2025, the Department of Labor's Employee Benefits Security Administration (EBSA) recovered nearly $1.4 billion in enforcement actions tied to benefit plan violations, closing 878 civil investigations with 556 resulting in required corrective action. Meanwhile, the Sixth Circuit's landmark Tiara Yachts, Inc. v. Blue Cross Blue Shield of Michigan ruling confirmed what many plan sponsors have long suspected: your TPA's contractual "guarantees" of payment accuracy may be worth far less than the paper they're printed on.

For fiduciaries of self-funded health plans, the implications are direct and personal. Under ERISA, fiduciary duty requires you to act prudently, monitor your service providers, and ensure plan assets are protected. A TPA's promise of 99% claims processing accuracy does not satisfy that obligation — especially when independent analysis routinely reveals error rates of 5–15%.

The Promise vs. Reality of TPA Payment Integrity Guarantees

Most Administrative Services Only (ASO) agreements include a performance guarantee around claims processing accuracy — typically 97–99%. On its face, this sounds reassuring. But dig deeper, and the protections start to unravel.

First, understand what these guarantees actually measure. TPA accuracy metrics typically assess whether a claim was processed according to the TPA's own adjudication rules — not whether the claim was paid correctly according to your plan document, industry-standard coding guidelines, or clinical appropriateness standards. A claim can be "accurately processed" by TPA standards and still represent an overpayment when measured against CPT®, HCPCS, ICD-10-CM, NCCI edits, or Medicare fee schedules. These metrics also often fail to catch medically unlikely events, duplicate or multiple once-in-a-lifetime procedures, unbundling schemes, and payments that violate the terms of the plan's own Summary Plan Description.

In other words, the TPA's accuracy guarantee measures whether they followed their process — not whether your plan paid what it should have.

Consider what a major carrier's own data reveals: UnitedHealthcare has reported recovering nearly $922 million for self-funded customers through its post-payment recovery programs, while simultaneously guaranteeing 99% processing accuracy. As one industry analysis noted, if only 1.4% of claims are improperly processed and routed to recovery, how can both the 99% accuracy guarantee and the massive recovery volume be true?

The answer lies in how "accuracy" is defined, measured, and reported. Common gaps in TPA payment integrity guarantees include:

• Narrow scope of measurement. Guarantees often cover only administrative processing steps, not clinical coding accuracy, medical necessity, or pricing appropriateness.

• Self-reported metrics. The same entity processing the claims is measuring its own performance. No independent validation is required.

• Sampling limitations. Most reviews cover only 3–5% of claims, missing systemic patterns that only emerge when 100% of claims are analyzed.

• Financial penalties that don't make you whole. Even when a guarantee is triggered, the typical remedy is a small credit against administrative fees — not recovery of the actual overpayments.

• Profit from recovery programs. Some TPAs retain 25–50% of recovered overpayments through "shared savings" programs, creating a financial incentive to allow errors and then profit from correcting them.

What Tiara Yachts Reveals About TPA Payment Integrity Failures

The May 2025 Sixth Circuit ruling in Tiara Yachts, Inc. v. Blue Cross Blue Shield of Michigan, No. 24-1223, is a watershed moment for fiduciary oversight. The court reversed a lower court's dismissal, holding that Tiara Yachts had plausibly alleged that BCBSM acted as an ERISA fiduciary when processing claims — and that it breached those duties by systematically overpaying providers.

The facts are instructive for every plan sponsor evaluating their TPA's payment integrity guarantees. BCBSM allegedly used an undisclosed claims-processing design called "flip logic" that allowed out-of-state providers to be reimbursed at full-billed charges rather than negotiated network rates. Then, rather than fix the problem, BCBSM launched a "Shared Savings Program" (SSP) that recovered a portion of the overpayments and kept 30% of the recovered amounts as its fee.

The court emphasized three critical principles:

• Functional fiduciary status. A TPA that exercises control over plan assets — including writing checks from plan funds — is a fiduciary regardless of what the contract says.

• Contractual shields fail. ERISA fiduciary duties cannot be disclaimed through contract language. The court stated it would not "elevate form over substance."

• Self-dealing exposure. When a TPA profits from correcting its own payment errors, it creates a structural conflict that may violate ERISA's prohibited transaction rules.

The DOL filed an amicus brief supporting the employer, reaffirming that funds remitted by a plan sponsor to a TPA for claims payment are plan assets under ERISA. This case puts every plan sponsor on notice: your TPA's accuracy guarantee is not a substitute for independent oversight.

The Fiduciary Risks Hiding Behind Payment Integrity Guarantees

For plan sponsors relying solely on their TPA's payment integrity guarantees, the fiduciary exposure is significant and growing. Here's what's at stake:

• Personal liability. Under ERISA §409, fiduciaries are personally liable for losses resulting from breaches of duty. D&O insurance typically does not cover ERISA fiduciary breaches.

• Duty to monitor. ERISA requires plan fiduciaries to actively monitor service providers. Accepting a TPA's self-reported accuracy metrics without independent verification fails this standard.

• Hidden conflicts of interest. TPAs owned by large carriers may direct patients to affiliated providers at higher costs, engage in cross-plan offsetting, or profit from their own recovery programs.

• Data access obstruction. Despite CAA requirements prohibiting gag clauses, many TPAs continue to restrict plan sponsors' access to granular claims data needed for independent validation.

• Regulatory enforcement escalation. EBSA's 2026 enforcement priorities include surprise billing compliance and mental health parity claims processing — both areas where TPA payment accuracy directly impacts plan sponsor liability.

Beyond Guarantees: How Independent Oversight Protects Fiduciaries

The solution isn't to abandon your TPA or renegotiate accuracy guarantees. It's to stop relying on them as your primary fiduciary defense. Independent claims oversight provides the verification that accuracy guarantees promise but cannot deliver.

ClaimInformatics' two platforms — ClaimIntelligence™ and FOCUS™ — address the specific gaps that TPA guarantees leave exposed:

• 100% claims analysis. Every claim is reviewed against a proprietary edit suite across 8 payment integrity categories — covering everything from NCCI and MUE standards to unbundling, upcoding, medically unlikely events, and systemic billing abuse. Applied to every single claim, not just a 3–5% sample.

• True [independence](https://www.claiminformatics.com/your-fiduciary-duties/avoid-conflicts/). No revenue from TPAs, carriers, networks, or providers. Zero conflicts of interest.

• Pre-pay and post-pay coverage as a continuum. Pre-pay editing stops improper payments before disbursement. Post-pay analysis (including PAIR™ historical lookback for 2-3 year retrospective recovery) identifies what got through. Reclamation services restore plan assets.

• CLEAR™ contract review. 1,100+ compliance checks across ASO/TPA agreements, SPDs, PBM contracts, and stop-loss agreements — with specific redline corrections and regulatory citations.

• Audit-ready documentation. Every finding includes transparent rationale and citations, creating the documented evidence of prudence that courts and regulators expect.

• Proven results. 5–15% error detection rates across $16B+ in claims analyzed, with average findings of $500–$1,200 per employee per year.

Frequently Asked Questions

Is a TPA's 99% accuracy guarantee meaningful for fiduciary compliance? Not by itself. TPA accuracy guarantees typically measure internal processing consistency — not whether claims were paid correctly under your plan document, standard billing and coding guidelines, or plan-specific benefit terms. ERISA requires fiduciaries to independently verify that plan assets are being managed prudently. A self-reported guarantee from the same entity processing the claims does not fulfill this obligation.

What did the Tiara Yachts ruling change for self-funded plan sponsors? The Sixth Circuit confirmed that TPAs exercising control over plan assets are ERISA fiduciaries — regardless of contractual disclaimers. It also established that profiting from correcting one's own payment errors (through "shared savings" programs) can constitute self-dealing. This means plan sponsors can no longer assume their TPA contract provides adequate protection. Full opinion: Tiara Yachts, Inc. v. BCBSM, No. 24-1223 (6th Cir. May 21, 2025).

What should plan sponsors do before their next TPA renewal? Conduct an independent ASO agreement analysis to identify hidden fees, data restrictions, and fiduciary risk provisions. Engage an independent payment integrity partner to validate claims accuracy beyond TPA self-reporting. Document all oversight activities to create a paper trail demonstrating prudent fiduciary governance. Review your TPA's recovery programs for conflicts of interest.

How does independent claims oversight differ from a TPA review? A TPA-controlled review is a carrier-administered checkpoint with limited scope, typically reviewing a small sample under the TPA's own standards. Independent claims oversight — a "claim review" under ERISA — is comprehensive, continuous, and conflict-free. It analyzes 100% of claims against industry-standard coding guidelines and provides fiduciary-grade documentation. As the DOL has made clear, fiduciary responsibility cannot be delegated away.

Can a plan sponsor be held liable for their TPA's payment errors? Yes. Under ERISA, plan sponsors retain fiduciary responsibility for claims administration even when using a TPA. If the TPA mismanages claims, hides fees, or engages in conflicted practices, the plan sponsor may be held personally liable for resulting losses to the plan. The duty to monitor service providers is a core fiduciary obligation.

The Bottom Line

Your TPA's payment integrity guarantee is a contractual commitment — not a fiduciary defense. In an era of intensifying ERISA litigation, DOL enforcement, and judicial scrutiny of TPA practices, relying on self-reported accuracy metrics is a fiduciary risk that no plan sponsor can afford.

Independent oversight isn't about distrust — it's about prudence. The same standard that protects 401(k) fiduciaries now applies to health plan administration. The question isn't whether your TPA is doing its best. The question is: can you prove it?

Schedule a complimentary fiduciary risk consultation to assess your plan's exposure — or request a free ASO & SPD Analysis before your next renewal.

Has your plan conducted an independent review of claims accuracy beyond your TPA's self-reported metrics? Share your experience in the comments.