By Alex Thompson, March 10, 2026

Investment Advice Sydney CBD

Understanding the Emerging Landscape of Voluntary Benefits

In recent years, fiduciary litigation surrounding employee benefits has navigated through various phases, predominantly focusing on retirement plans, pharmacy benefit managers, and prescription drug pricing. Historically, these litigations encountered hurdles, particularly concerning the issue of standing. However, recent developments suggest that this obstacle is being addressed through a novel approach to the targets of these lawsuits.

The Shift in Litigation Strategy

On December 23, 2025, the law firm Schlichter Bogard filed coordinated class-action lawsuits against notable corporate entities including United Airlines, LabCorp, Community Health Systems, and Universal Services of America. The focal point of these lawsuits? Voluntary benefit programs that provide accident, critical illness, cancer, or hospital indemnity insurance. What distinguishes these legal actions from previous ones is not just the benefits involved but also the inclusion of national benefits consultants such as Mercer, Gallagher, Lockton, and Willis Towers Watson as co-defendants.

This marks a significant evolution in healthcare fiduciary litigation, indicating a deliberate strategy rather than a sporadic experiment. Schlichter Bogard’s past litigious endeavors have successfully reshaped fiduciary law, emphasizing the importance of monitoring and oversight in employee benefit plans. The firm consistently opts for systemic change, indicating that their involvement in voluntary benefit litigation is a calculated move aimed at redefining the parameters of fiduciary responsibility.

Why Focusing on Voluntary Benefits Matters

Historically, cases involving pharmacy benefit managers and prescription drug pricing have faced dismissal due to the inability to demonstrate concrete financial harm linked to fiduciary breaches. Employers typically had the authority over premium setting, and many employees reached their out-of-pocket maximums, which diluted claims of individual injury.

However, the paradigm shifts with voluntary benefits, as employees bear the full cost of premiums through payroll deductions. Each dollar spent is directly taken from their earnings, making any alleged harm immediate, personal, and quantifiable. From a standing perspective, this changes the landscape notably compared to previous healthcare fiduciary theories, providing a clearer path for litigation.

The Role of Consultants as Potential Fiduciaries

The complaints assert that consultants are not merely passive entities in these arrangements. They allege that consultants exercised significant control over crucial aspects such as plan design, carrier selection, and product placement, all while functioning under commission structures that are contingent on premium volumes. This dynamic creates potential conflicts of interest, incentivizing consultants to endorse higher-cost products while neglecting more cost-effective alternatives.

The legal implications of this structure suggest a functional fiduciary role for these consultants, combined with their knowledge of employer breaches. The remedy sought revolves around equitable disgorgement of commissions, positioning these cases more as governance disputes rather than traditional damage claims.

The Significance of Commission Levels

Across the spectrum of lawsuits filed, the complaints highlight the commission rates that plaintiffs argue exceed market norms significantly. Specific commissions ranged from approximately 22% to nearly 40% of premiums, starkly contrasting with commissions reported in the low single digits for other employer plans handled by the same consultants.

This disparity points not just to excess compensation but raises questions about the validity and motives behind the commission structures, suggesting that they may not arise from objective benchmarking but from conflicted advisory practices.

Examining the ERISA Safe Harbor Conditions

Voluntary benefit plans can evade ERISA coverage under specific criteria laid out in 29 C.F.R. 2510.3-1(j): (1) no employer contributions; (2) completely voluntary participation; (3) the employer’s role is limited to permitting publicity and payroll deductions without endorsement; (4) the employer does not receive any consideration beyond reasonable administrative compensation.

The endorsement trap: According to Department of Labor (DOL) advisory opinions, any affirmative endorsement can trigger ERISA coverage. Simple actions such as including the plan in benefits guides or utilizing employer logos could be deemed as endorsements. Notably, all four defendants acknowledged ERISA coverage in their Form 5500 filings, which highlights the complexity surrounding these arrangements.

Impact of the Consolidated Appropriations Act of 2021

The implementation of the Consolidated Appropriations Act of 2021 has quietly altered the landscape of fiduciary litigation. Since December 2021, brokers and consultants are mandated to disclose all forms of compensation, direct or indirect, pertaining to ERISA health plans. With four years of disclosure data available, plaintiffs can now assess compensation levels across various plans in relation to established reasonableness standards. Inadequate disclosures may compromise reliance on prohibited transaction exemptions, transforming what was once an opaque process into one that is subject to scrutiny.

The Predictable Path of Expansion

The structure of the lawsuits, coupled with pre-filing recruitment efforts, indicates a trajectory of expansion rather than contraction. Targeted campaigns aimed at specific employers have been in motion for months prior to the filings, and the same national consultants frequently emerge across different plans. The complaints inherently contain comparative analyses across plans, reinforcing the likelihood of additional employer defendants being implicated as litigation unfolds.

Identifying Vulnerable Employers

The emerging risk profile indicates that large employers offering employee-funded voluntary benefits may face the most significant legal risk. Programs with commission structures above 20% of premiums present heightened exposure, particularly if there are long-standing relationships with consultants lacking evidence of competitive bidding processes.

In this context, scale is important, but the structural integrity of compensation models is paramount.

Consultants: A Central Pressure Point

By incorporating consultants as defendants, these legal actions challenge compensation frameworks at the organizational level rather than on a case-by-case basis. This is reminiscent of previous excessive fee litigations where recordkeepers and advisors faced sustained pressure that ultimately transformed pricing dynamics within the industry. Early victories for the defense may not conclude exposure, as historical patterns suggest the firm will pursue appellate review to establish long-lasting standards.

Voluntary Benefits: A Strategic Point of Entry

These lawsuits indicate that voluntary benefits are not inherently problematic but are strategically advantageous for plaintiffs. Employee-paid products eliminate many standing hurdles that have hindered prior litigation efforts. Once fiduciary principles are established within this framework, it paves the way for further legal examination of bundled medical, pharmacy, or other welfare arrangements.

Additionally, other ERISA theories targeting wellness programs and tobacco-related surcharges are concurrently advancing, reframing routine cost-shifting methods as fiduciary decisions. These efforts add to the evolving narrative rather than replace it.

A Broader Perspective on ERISA Litigation

This situation is not merely a narrow dispute surrounding the nuances of insurance commissions; it underscores the evolution of ERISA litigation through the resolution of procedural issues first. Once standing has been affirmed through these voluntary benefits, substantive theories are likely to emerge subsequently.

Consequently, governance practices that previously received little scrutiny are now being critically evaluated through a fiduciary lens, profoundly influencing the administration of retirement and benefit plans. This evolution is poised to continue beyond just a handful of recent filings.

Utilizing Rain Intelligence for Proactive Risk Management

Rain Intelligence specializes in tracking early signals of ERISA litigation, monitoring coordinated filings, and intervening shifts in fiduciary theory before they reach widespread exposure across the industry. By assessing when plaintiff firms transition from exploratory case strategies to systematic campaigns, we can identify which plan structures are most likely to come under scrutiny next.

For organizations seeking visibility and insight into these evolving risks, scheduling a brief demonstration can illuminate how to leverage early intelligence to navigate the complexities of fiduciary accountability effectively.

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