Plan sponsor pleads for mercy…….”I didn’t know my broker made us broker!”
Passive plan management is no longer an option plan sponsors can afford…………
Glenn Fisher · October 20, 2026 – SOURCE: The Legal Wave: Why Health Plans Are the Next ERISA Battleground
On December 23, 2025, the benefits industry crossed a line it cannot uncross.
Schlichter Bogard, the law firm widely credited with transforming the retirement plan industry, filed class action lawsuits against major employers over their health plans, including United Airlines, Labcorp, Community Health Systems, and Universal Services of America. The signal was not just who they sued. It was how. For the first time, the lawsuits did not stop with the employers. The benefits consulting firms themselves were named as defendants, with allegations tied to compensation structures that in some cases reached as high as 40% of premiums.
If you sponsor a health plan, this is the moment to understand what the law already expects of you.
The 401(k) playbook, applied to healthcare
To grasp the magnitude, look at what this same firm did to retirement plans. Through relentless, precedent-setting litigation, reinforced by three unanimous Supreme Court decisions, it forced a complete rethinking of fiduciary responsibility. Fee compression became the norm. Passive plan management became impossible. A new standard of care was born.
At first, the industry dismissed it. Then came settlements. Then came structural change. Healthcare is now on that same path, and the early numbers are sobering: since 2020, ERISA lawsuits related to employer health plans have surged, with employers including Johnson & Johnson, Quest Diagnostics, and Duke University facing legal action. Employers lose or settle most of these cases, and settlements often exceed $10 million.
What the law actually requires
Under ERISA, offering a health plan is not just a business decision. It is a fiduciary responsibility with three core duties.
- Loyalty. Act solely in the best interest of employees and their beneficiaries. Fair contracts, high-quality and cost-effective care, and no financial conflicts of interest with brokers or consultants.
- Prudence. Manage the plan with care and diligence. Review claims data regularly. Benchmark costs against peers. Ensure vendors provide full transparency into pricing and fees.
- Monitoring. Hold every vendor accountable: the TPA, the PBM, the broker. Audit claims. Demand full disclosure of all compensation.
Two more facts make this personal. Under ERISA Section 409, a breaching fiduciary is personally liable to restore plan losses. And under Section 410, that responsibility cannot be disclaimed by any agreement. The duty sits with you, by name.
How employers get in trouble
Employers do not set out to violate their duties. The opacity of the system sets the traps. One audit found that 94% of TPA and PBM contracts contained hidden fees the employer did not know about. One self-funded employer discovered its TPA charging a 10% markup on every hospital claim, which was costing $2.5 million a year. RAND found employers paying hospitals an average of 254% of what Medicare pays. And 72% of employers cannot access their own detailed claims data, which makes proving prudence nearly impossible.
You cannot manage what you cannot see. And you cannot defend what you never reviewed.
The defense is also the strategy
Here is the encouraging part. Courts do not expect perfect outcomes from fiduciaries. They expect a prudent, documented process: review the plan, benchmark the costs, question the fees, write it down.
That is exactly the discipline that cuts health plan costs 20 to 40 percent. The employers who treat their plan like the second-largest expense it is, with an owner, a strategy, and a scorecard, are simultaneously building the strongest possible legal defense and the strongest possible P&L. Same work. Two payoffs.
The gavel is coming for the industry either way. The only question is which side of the standard your plan will be on. Start with the FRAMEwork in Fiduciary Ally, get a documented review of your plan, and know your numbers before renewal season decides them for you.
Glenn Fisher, author of Fiduciary Ally: A CEO’s Guide to Cutting Health Plan Costs, Reducing Risk & Taking Control of Employee Benefits