Benefits August 13, 2008

Fifth Third Slapped with Stock-Drop Participant Lawsuit

AUGUST 13, 2008 (PLANSPONSOR.com) - Fifth Third Bancorp has joined the ranks of plan sponsors hit with a participant stock-drop lawsuit with a new case filed this week alleging bank officials imprudently kept a stock fund in their plan.
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Plaintiff John Dudenhoefer, a Fifth Third employee from Collier County, Florida, charged in the suit filed in the U. S. District Court for the Southern District of Ohio that the bank hid its true financial picture leading to its stock price to be artificially inflated.

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Then the stock suffered a major plunge in its share price when the company’s financial problems were revealed.

Attorney Ronald R. Parry of Covington, Kentucky, filed the suit on behalf ofDudenhoefer, requesting that the case be certified as a class action for participants in the Fifth Third Bancorp Master Profit Sharing Plan between October 19, 2007 and the present.

The suit alleges the bank’s action caused the plan to lose millions of dollars. Among a long list of defendants was Kevin T. Kabat, the bank’s president and CEO.

Dudenhoefer’s suit charges that the bank did not disclose that:

  • its operating expenses were rapidly increasing;
  • it was suffering higher loan losses because of “weakening credit quality;”
  • it needed a cash infusion because of its fiscal problems.

On June 18, 2007, the company revealed its true financial condition and announced plans to raise $2 billion in capital and slash its dividend 66% due to mounting credit losses. On this news, the company's shares plunged 27% to close at $9.26 per share after heavy trading. That represented a decade low price, according to news reports.

The news reports said the bank also announced that it would cut its dividend, sell non-core assets and issue convertible preferred stock to improve its capital position.

Headquartered in Cincinnati, the bank has 18 affiliates with about 1,300 banking centers and more than 2,000 ATMs in Ohio, Kentucky, Indiana, Georgia, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, and Missouri.

The lawsuit is available here .

Benefits August 12, 2008

Employers Count on Workers to Help Control Pharmacy Benefit Costs

August 12, 2008 (PLANSPONSOR.com) - The success of pharmacy benefit cost management strategies cited by respondents to a survey from Buck Consultants will depend largely in part on employee involvement.
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According to a Buck press release, the most important clinical management steps employers are taking to control pharmacy benefit costs are disease management, care management, and smoking cessation programs. The top strategic initiatives for long-term cost management cited by respondents include:

  • Providing employees with tools and information,
  • Providing employee education, and
  • Worksite wellness and health activities.

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Specialty Medications

While Michael Jacobs, a principal at Buck Consultants, says the emergence of new, very expensive specialty medications is one of the trends driving employers to review their cost management strategies, 28% of survey respondents did not know their relative spend on these expensive drugs. Fifty-two percent of survey respondents said they believe specialty medications represent 10% or less of their total pharmacy costs.

Almost all (99%) respondents to Buck's survey said they provide prescription drug coverage as part of their health care program for active employees. Employers cite the health of employees and business competitiveness as the most important reasons for providing this coverage, according to the press release.

Fifty-one percent of respondents indicated they use employee cost sharing as a utilization management tool, with the most common cost-sharing range being 21% to 30% (used by 44% of respondents).

According to Jacobs, more than one-third (37%) of respondents said pharmacy benefits represent between 16% and 20% of total health care costs, and another 29% reported pharmacy benefits are more than 21% of total health plan costs.

"Easy pharmacy network access" and "comprehensive formulary" were cited as the top strengths of respondents' pharmacy benefits programs, and "complete disclosure of manufacturer revenue" and "complete disclosure of all costs" were cited as major weaknesses.

Buck's survey report, "Understanding Your Strategies for Coping with the Changing Pharmacy Benefit Landscape," is available for $100 from Buck's Global Survey Resources, 500 Plaza Drive, Secaucus, NJ, 07096-1533, or by calling 800-887-0509, or by ordering online at www.bucksurveys.com .

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