The 401(k) Litigation Blueprint: From Retirement to Healthcare Fiduciary Liability

On December 23, 2025, Schlichter Bogard LLC — the firm that extracted billions in settlements from 401(k) plan fiduciaries — filed four simultaneous ERISA class action lawsuits targeting major employers and their benefits consultants. The defendants include United Airlines, CHS/Community Health Systems, Laboratory Corp. of America, and Allied Universal, alongside consulting giants Mercer, Gallagher, Lockton, and Willis Towers Watson.

The message is unmistakable: the litigation strategy that transformed retirement plan governance is now targeting healthcare benefits — and the fiduciaries who oversee them.

For plan sponsors, benefits committees, brokers, and TPAs managing self-funded health plans, this is no longer a hypothetical risk. It is a present-day reality with personal liability consequences. According to plan insurer Encore Fiduciary, nearly 450 fee-or-forfeiture lawsuits were filed from 2020 through late 2024 in the retirement space alone. The healthcare benefits arena is now squarely in the crosshairs.

The 401(k) Litigation Blueprint: From Retirement to Healthcare

To understand where healthcare fiduciary litigation is heading, you need to understand where it came from. In 2006, attorney Jerry Schlichter filed the first 401(k) excessive fee lawsuit — Tussey v. ABB Inc. — alleging plan fiduciaries failed to monitor recordkeeping fees and investment choices. That case took 13 years to resolve and settled for $55 million.

Since then, Schlichter Bogard has secured billions in settlements, won the only three 401(k) fee cases ever decided by the U.S. Supreme Court (Tibble v. Edison and Hughes v. Northwestern University among them), and is recognized by Holland & Knight as having "obtained billions of dollars in ERISA class action settlements."

The playbook is well-established: identify fiduciaries who failed to monitor fees and vendor performance, demonstrate that participants paid excessively as a result, and hold those fiduciaries personally liable under ERISA Section 502.

Now that playbook is being applied to healthcare benefits — and the implications for self-funded plan sponsors are profound. Learn more about your fiduciary duties under ERISA.

The December 2025 Lawsuits: What Healthcare Fiduciaries Need to Know

The four lawsuits filed on December 23, 2025, target voluntary benefit plans — specifically, accident, critical illness, cancer, and hospital indemnity insurance. While these are employee-paid supplemental coverages, the suits allege that employers endorsed and administered these programs in ways that bring them under ERISA's fiduciary framework.

Key allegations include:

• Employers exercised discretionary authority over plan selection and administration, making them ERISA fiduciaries

• Benefits consultants engaged in self-dealing by structuring plans to maximize their own commissions — allegedly ranging from 22% to 40% of premiums

• Employers failed to monitor whether compensation paid to brokers was reasonable, as required under ERISA

• Participants were forced to pay excessive premiums because fiduciaries did not identify or recommend lower-cost alternatives

All four employer-defendants conceded on their Form 5500 filings that these voluntary plans are subject to ERISA. That concession, as legal analysts have noted, significantly strengthens the plaintiffs' position.

Perhaps most significantly, these suits don't just target employers. They name benefits consultants as co-defendants, arguing that brokers who exercise discretion in carrier selection and plan design are functional ERISA fiduciaries — regardless of how their contracts characterize their role.

Why This Should Alarm Self-Funded Plan Fiduciaries

If Schlichter Bogard is targeting voluntary benefit plans — programs that many employers barely monitor — the risk to traditional self-funded health plans is exponentially greater. Self-funded plans involve far larger plan assets, more complex vendor relationships, and greater fiduciary exposure.

The parallels between 401(k) litigation and healthcare fiduciary exposure are striking:

• Excessive fees. Just as 401(k) lawsuits challenged unreasonable recordkeeping fees, healthcare litigation targets hidden fees in ASO agreements, PBM contracts, and cross-plan offsetting arrangements where TPAs may retain 25–40% of recovered overpayments.

• Failure to monitor service providers. Courts in the 401(k) space have consistently held that fiduciaries cannot blindly rely on their vendors. The same standard applies to TPAs and carriers for processing healthcare claims.

• Undisclosed conflicts of interest. The CAA Section 202 now requires brokers to disclose all sources of compensation. Dual compensation models — consulting fees plus carrier commissions — mirror the conflicts that fueled 401(k) litigation.

• No documentation of prudence. The single most common weakness in ERISA defense cases is the absence of documented oversight processes. If you cannot show you monitored your vendors, benchmarked fees, and reviewed claims accuracy, you are exposed.

The Schlichter firm has also been running LinkedIn advertisements seeking employees enrolled in health plans at companies like Target Corp. and PetSmart Inc. — a clear signal that traditional healthcare fiduciary lawsuits may not be far behind.

How Independent Oversight Protects Fiduciaries

The lesson from the 401(k)-litigation wave is clear: fiduciaries who can demonstrate a documented, prudent process for vendor oversight fare dramatically better in court than those who cannot. In healthcare, that means going beyond carrier self-reporting and TPA guarantees to establish genuine, independent oversight.

ClaimInformatics delivers exactly what this new litigation environment demands:

• 100% independent analysis — No revenue from TPAs, carriers, networks, or providers. No conflict of interest. The only truly unbiased view of your claims data.

• 100% claims review — Not statistical sampling. Every claim analyzed using the ClaimIntelligence™ edit suite — a proprietary edit suite across 8 payment integrity categories aligned to CPT®, HCPCS, ICD-10-CM, NCCI, and CMS standards — with 5–15% error detection rates.

• Audit-ready fiduciary documentation — The kind of paper trail that demonstrates prudent oversight to regulators and courts. Documentation that proves you monitored vendors, validated accuracy, and acted on findings.

• Pre-pay and post-pay capabilities as a continuum — Through the FOCUS™ governance platform, ClaimInformatics can prevent improper payments before they occur and identify recoverable overpayments after the fact (including PAIR™ historical lookback for 2-3 year retrospective recovery).

• Fee and vendor validation — Independent benchmarking of TPA fees, broker compensation, and carrier arrangements that help fiduciaries document due diligence under ERISA and the CAA.

The firms being sued right now are not small operators. They are Fortune 500 companies and the nation's largest benefits consultancies. The implicit lesson: size and reputation do not insulate you from fiduciary liability. Only process, documentation, and independent oversight can.

Frequently Asked Questions

How does 401(k) litigation affect healthcare plan fiduciaries? The same ERISA fiduciary standards that govern retirement plans apply to health and welfare benefits. Schlichter Bogard's December 2025 lawsuits demonstrate that the 401(k) excessive fee litigation strategy — targeting fiduciaries who fail to monitor service providers and ensure reasonable compensation — is now being applied directly to healthcare benefit plans. Self-funded plan sponsors face identical personal liability exposure under ERISA Section 502.

Can benefits brokers and consultants be held liable as ERISA fiduciaries? Yes. The December 2025 lawsuits name Mercer, Gallagher, Lockton, and Willis Towers Watson as co-defendants, arguing that brokers who exercise discretion in selecting carriers, designing benefit plans, and receiving commissions are "functional fiduciaries" under ERISA, regardless of how their contracts describe their role. Under ERISA §3(21), fiduciary status is determined by function, not title.

What should self-funded plan sponsors do to reduce fiduciary litigation risk? Document your oversight process. Benchmark fees against independent standards. Engage independent claims review — not the TPA or carrier reviewing its own work. Verify broker compensation disclosures under CAA Section 202. Establish a formal benefits committee and maintain records of all fiduciary decisions. The standard is not perfection; it is prudence — demonstrable, documented, good-faith oversight.

Are voluntary benefit plans subject to ERISA fiduciary requirements? They can be. ERISA provides a safe harbor for voluntary benefit plans under 29 C.F.R. § 2510.3-1(j), but the requirements are strict: the employer must contribute nothing, receive nothing beyond administrative costs, not endorse the plan, and participation must be truly voluntary. If the employer endorses, administers, or exercises any discretion over the program, ERISA's fiduciary framework may apply. All four defendants in the December 2025 suits conceded ERISA applicability on their Form 5500 filings.

How does independent claims review protect against healthcare fiduciary litigation? Independent claims review — such as that provided through ClaimInformatics — creates the documented evidence of prudent oversight that courts look for in ERISA cases. It demonstrates that you monitored vendor performance, validated claims accuracy, identified overpayments, and took action to protect plan assets. In 401(k) litigation, the single greatest predictor of a favorable outcome was whether fiduciaries could show a documented, deliberate process for evaluating fees and performance.

The Bottom Line

The 401(k) fiduciary litigation revolution didn't happen overnight, but when it arrived in force, it reshaped an entire industry. Healthcare fiduciary liability is following the same trajectory — and the December 2025 Schlichter lawsuits are a clear inflection point. Plan sponsors, benefits committees, brokers, and TPAs who fail to establish independent oversight, document their processes, and demonstrate prudent vendor management are increasingly exposed to personal liability under ERISA.

The question is no longer whether healthcare fiduciary litigation is coming. It's whether you're prepared for it.

Schedule a complimentary fiduciary alignment consultation to assess your plan's exposure and build a defensible oversight framework.

What steps has your organization taken to document fiduciary oversight of your health plan? Share your experience in the comments.