Voluntary Benefits:

The Next Wave of Fiduciary Litigation

For much of the past decade, ERISA fiduciary litigation has followed a familiar path. Plaintiffs focused heavily on retirement plans and, more recently, on large medical plans, particularly prescription drug pricing and alleged failures to control plan costs. Employers, advisors, and brokers largely understood where the legal pressure points were and adapted accordingly. Voluntary benefits, by contrast, were widely viewed as peripheral to fiduciary risk, often assumed to fall outside ERISA’s reach altogether.

The Evolving Landscape of Fiduciary Litigation

Where We Were: The Domino-Effect of Johnson & Johnson

The modern wave of fiduciary litigation against employer health plans began with Johnson & Johnson. In Lewandowski v. Johnson & Johnson, the plaintiffs alleged that the company breached its ERISA fiduciary duties by failing to prudently oversee its prescription drug program, particularly through inadequate monitoring of PBM pricing and excessive participant costs. While the initial case faced procedural hurdles, it was quickly refiled with revised allegations, signaling that the legal theory, not the outcome, was the point.

What followed was a domino effect. Similar fiduciary claims soon emerged against other large employers, including Wells Fargo, Walmart, Amazon, and UnitedHealth Group, each challenging different aspects of health plan administration, from PBM oversight and drug pricing to plan design and cost controls. Together, these cases made clear that courts were being asked to evaluate employer health plans through the same fiduciary lens long applied to retirement plans.

By the time these cases began stacking up, the message was unmistakable. Employer health and welfare plans were no longer insulated from ERISA fiduciary scrutiny, and process failures, rather than benefit design flaws, were becoming the central battleground.

Where We Are: The Introduction of Voluntary Benefits

In late December, four new class action lawsuits quietly filed by the well-known ERISA plaintiff firm Schlichter Bogard signaled a meaningful shift in fiduciary enforcement. Unlike earlier cases centered on retirement or core medical benefits, each of these lawsuits targets employer-sponsored health and welfare plans offering voluntary benefits, such as accident, critical illness, and hospital indemnity insurance. Together, they represent a potential turning point in how fiduciary obligations are understood and enforced across the voluntary benefits landscape.

The four cases at the center of this emerging litigation trend are:

• Lab. Corp. of America Holdings Group Benefit Plan, et al. v. Lab. Corp. of America Holdings, Willis Towers Watson US LLC, et al. (N.D. Ill. 2025)
• Allied Universal Health and Welfare Benefit Plan, et al. v. Universal Services of America, LP dba Allied Universal, Mercer Health and Benefits Admin. LLC, Lockton Companies, LLC, et al. (S.D.N.Y. 2025)
• Community Health Systems, Inc. Welfare Benefit Plan, et al. v. Community Health Systems, Inc., Gallagher Benefit Services, Inc., et al. (N.D. Ill. 2025)
• United Airlines Consolidated Welfare Benefit Plan, et al. v. United Airlines, Inc., Mercer Health & Benefits Admin., LLC, et al. (N.D. Ill. 2025)

These cases reframe fiduciary responsibility in the context of voluntary benefits by challenging long- standing assumptions about ERISA exemption, plan design, and the role advisors and brokers play in selecting, structuring, and profiting from voluntary benefit offerings.

Why Voluntary Benefits Are Under the Microscope

At the outset, each of the four complaints confronts a question that many employers and advisors have long sidestepped: whether voluntary benefit plans are, in fact, exempt from ERISA.

Although voluntary benefits are frequently marketed and administered under the assumption that they fall within ERISA’s voluntary plan safe harbor, emerging data suggests that more than 80% of worksite and voluntary benefit arrangements may actually be subject to ERISA. Plaintiffs contend that commonly used plan structures fail to meet the safe harbor’s narrow requirements, particularly where employers or their advisors take an active role in endorsing the plan, administering benefits, or selecting vendors.

Once ERISA coverage is plausibly alleged, the fiduciary consequences quickly come into focus. Across all four lawsuits, the claimed breaches are notably consistent.

Common Fiduciary Allegations

Setting aside the exemption issue, the core claims focus on fundamental duties of prudence and loyalty under ERISA. Specifically, the complaints allege:

• Failure to prudently select and monitor service providers, including the absence of competitive bidding or RFP processes;
• Failure to monitor, control, or leverage plan bargaining power to limit broker and consultant compensation, resulting in allegedly excessive fees paid from participant contributions; and
• Knowing participation in prohibited transactions, including self-dealing and revenue-driven plan design.

These allegations mirror the fiduciary themes long seen in retirement plan litigation. The difference is the setting: health and welfare plans where voluntary benefits have historically operated with far less formal governance and documentation.

Why Advisors and Brokers Are Exposed

These cases may have a more immediate and profound impact on advisors and brokers than prior waves of fiduciary litigation. Voluntary benefits are frequently misunderstood from a compliance standpoint, leading to informal practices that may not withstand ERISA scrutiny. Advisors often play a central role in curating carrier options, recommending products, influencing pricing, and structuring compensation, which plaintiffs increasingly frame as discretionary fiduciary conduct.

In addition, participant harm may be easier to allege and quantify. Plaintiffs can point to loss ratios, industry norms, and carrier pricing structures to argue that participant-paid premiums generated outsized revenue for intermediaries. The use of a prominent ERISA plaintiff firm with deep retirement plan experience further signals that this is not an experimental theory, but a deliberate expansion into health and welfare plans.

At their core, these cases challenge whether voluntary benefit plans have been mismanaged under a false assumption of ERISA exemption and whether advisors and brokers acting as functional fiduciaries have participated in prohibited transactions.

What Employers and Brokers/Advisors Can Do Now

Although these cases are still in their early stages, employers and their brokers/advisors do not need to wait for court rulings to begin mitigating risk. Practical steps include:

• Re-evaluating whether voluntary benefit arrangements truly satisfy the ERISA safe harbor and clearly documenting that analysis;
• Clarifying fiduciary status in engagement agreements;
• Increasing transparency around compensation, including commissions, overrides, and carrier-paid incentives;
• Developing/maintaining competitive selection processes, such as periodic RFPs or benchmarking;
• Documenting recommendations and decision rationales; and
• Avoiding practices that could be characterized as self-dealing, particularly where revenue considerations influence plan design or carrier selection.

Looking Ahead

As these lawsuits progress, courts will be asked to address foundational questions: whether voluntary benefit plans are truly exempt from ERISA, whether brokers can be deemed functional fiduciaries, and whether process-based allegations alone are sufficient to sustain fiduciary claims. The answers to those questions will shape not only litigation outcomes, but industry practices. As we have seen with retirement plan litigation, governance expectations often change long before final rulings are issued. Voluntary benefits now appear poised to follow that same trajectory.

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