Purpose:
- In 2025, there were several major fiduciary lawsuits against large employers over alleged breaches of fiduciary management of health plans, and this new wave focuses on voluntary benefits.
- Plan participants and plaintiff attorneys appear poised to challenge how expensive benefit plans are becoming and are looking for ways with new transparency measures to hold fiduciaries accountable to act solely in the best interest of participants.
Additional Information:
Schlichter Bogard LLC is a well-known law firm that, for the last 15-20 years, has successfully challenged employers for exorbitant fees and poor performance in retirement plans. Court decisions and settlements on those cases led to industry-wide shifts in fiduciary accountability for retirement plans. In the final week of 2025, the firm launched four new lawsuits against large employers and their large insurance brokers alleging that fiduciaries of voluntary plans have improperly charged employees substantially more than the claims justify, with only 25% to 35% funding claims, and up to 40% of what employees pay used to pay commissions to brokers.
Practical Impact to Employers:
The employer, and specifically the decisionmakers and others with authority over the benefit plans, are fiduciaries of those plans and must manage them prudently, acting solely in the best interest of participants. Third parties, including insurance brokers, may also be functional co-fiduciaries or willing participants in known breaches of fiduciary duties. So, it is vital employers efficiently document the process each year that goes into selecting service providers, benefit offerings, fees, and more. It is not always about going with the lowest cost option, but rather about choosing what is best for participants overall. So, having a fiduciary committee with various employee representatives providing input is instrumental.
COMMENTS