On December 23, 2025, four large employers and several national benefits consulting firms were sued in connection with their provision of employee-paid “voluntary benefits,” generally marking the first time that the plaintiffs’ bar sought to test the application of ERISA’s fiduciary standards in the voluntary benefits space. This wave of class action complaints brought by Schlichter Bogard LLC was filed against (1) Community Health Systems, Inc. (“CHS”) and Gallagher; (2) Laboratory Corporation of America Holdings (“Labcorp”) and Willis Towers Watson (“WTW”); (3) United Airlines, Inc. and Mercer; and (4) Universal Services of America, LP (d/b/a Allied Universal) with Mercer and Lockton,1 and imports familiar fiduciary concepts from the excessive fee cases that have targeted hundreds of 401(k) and 403(b) plan sponsors in recent years and attempts to apply them to the pricing and distribution model of voluntary benefits. The complaints allege breaches of fiduciary duty, prohibited transactions and self-dealing that purportedly caused employees to pay excessive and unreasonable premiums for the voluntary plans.
As discussed further below, a key question that courts will have to grapple with in each of these cases is whether the plans fall outside the ambit of ERISA in accordance with the U.S. Department of Labor’s (DOL) “voluntary plan” safe harbor at 29 C.F.R. § 2510.3-1(j) or whether the employers’ conduct amounted to endorsement of these arrangements such that the “voluntary plan” safe harbor does not apply. Employers that make accident, critical illness, hospital indemnity and similar types of voluntary insurance available to their workers will want to monitor these cases closely, and they may wish to assess their governance and fiduciary processes—especially if they believe their arrangements may be subject to ERISA’s requirements.
Summary of the Four Complaints and Plaintiffs’ Theories of Liability
The four complaints—three of which were filed in the Northern District of Illinois and the last one of which was filed in the Southern District of New York—are substantially identical. Each asserts that the voluntary benefit programs at issue qualify as ERISA plans and that the employers and the benefits brokers involved acted as plan fiduciaries. Plaintiffs contend that the employers are ERISA fiduciaries because they allegedly exercised discretionary authority over the administration of the voluntary benefit plans. Based on that purported fiduciary status, plaintiffs argue that the employers owed duties to carefully and prudently select brokers and insurance carriers for the voluntary benefit programs they were making available to their employees. Plaintiffs further claim that employers had an ongoing duty to monitor all service provider compensation to ensure that only reasonable fees were paid. To satisfy that duty, plaintiffs say the employers should have reviewed benefits, premiums, carriers, claims and commissions, and they should have compared program fees to reasonable market rates.
With respect to the brokers, plaintiffs allege they are “functional” fiduciaries subject to ERISA. According to plaintiffs, industry practice gives brokers discretion in administering voluntary benefit plans, including by withholding information about lower-cost options to maximize the brokers’ commissions. Plaintiffs assert that brokers may “screen” bids from carriers and present employers with only a curated set of options, excluding alternatives deemed to offer insufficient commissions. Plaintiffs also allege that brokers engage in self-dealing through commission structures tied to higher-premium products, creating a direct conflict with participants’ interest in lower costs.
Across all four complaints, plaintiffs claim that fiduciaries breached their duties by failing to monitor, negotiate, and ensure prudent and reasonable carrier selection, broker commissions and loss ratios. They also assert self-dealing and functional fiduciary liability for the conduct of the brokers. Plaintiffs support their allegations by benchmarking the broker commissions/fees (as a percentage of the premiums paid) against what participants at other companies paid where the same broker(s) was used. Plaintiffs’ comparator plans all had average broker commissions that were materially lower despite covering fewer participants, in order to make the point that the defendant-employers did not utilize their bargaining power to negotiate more competitive fees.
Plaintiffs maintain that the employers lacked any process to review, select or monitor carriers and brokers or to confirm that broker commissions were reasonable. They further allege ERISA prohibited transactions, asserting that employers and brokers caused the payment of excessive commissions from plan assets. Plaintiffs claim they were financially harmed by overpaying for voluntary benefits over several years and seek, among other remedies, disgorgement of profits, removal of breaching fiduciaries and recovery for all losses to the plans.
Legal Framework: ERISA’s Voluntary Plan Safe Harbor
Many employers consider voluntary benefits to fall outside ERISA when offered on a payroll-deduction basis with minimal employer involvement. However, the DOL’s safe harbor at 29 C.F.R. § 2510.3-1(j) to fall outside ERISA is narrow and requires four conditions to be met: (1) no employer contributions; (2) participation in the program is completely voluntary for employees; (3) strictly ministerial employer functions “without endorsing” the program; and (4) no employer cash or other consideration other than reasonable cost reimbursement for actual payroll-deduction administration. Failure of any element places the arrangement under ERISA.
The DOL’s guidance has cautioned that an employer is deemed to “endorse” a program if it expresses any positive, normative judgment about the program—actions that can occur through communications or involvement that goes beyond neutral facilitation. The complaints cite DOL Advisory Opinion 94-23A and examples of potential endorsement such as using employer logos on marketing materials, exclusive notifications or reminders, or receiving additional broker services that may constitute compensation. Such activities can potentially render the voluntary benefit plans to be subject to ERISA, triggering fiduciary duties (loyalty, prudence, monitoring) and prohibited transaction rules.
According to the complaints, employers frequently misclassify voluntary benefits as non-ERISA despite significant employer involvement and broker compensation structures. They point to industry observations that a large share of “worksite and voluntary benefits” programs are, in practice, ERISA plans despite assumptions to the contrary, increasing litigation and compliance risk.
The complaints proceed on the premise that the voluntary benefits programs fall under ERISA because the employers went beyond the safe harbor’s guardrails by allegedly endorsing the programs. Among other things, they note how each employer conceded in its Form 5500s that the program was subject to ERISA and each employer accepted service relationships or other benefits from the consultant(s) (in exchange for allegedly permitting excessive commissions to be embedded in employee premiums). According to the plaintiffs, the employers’ actions exceeded neutral payroll-deduction administration, therefore rendering the arrangements subject to ERISA. Once ERISA applies, the employer and, in many instances, the consultant, are alleged to be fiduciaries with duties of loyalty and prudence and exposure under co-fiduciary and party-in-interest theories.
Practical Considerations for Voluntary Benefit Plan Sponsors
For employers that offer these types of voluntary benefit programs, the specifics of their programs will vary, and we’d be happy to review and discuss in more detail some general fiduciary principles and process pointers that our clients can consider in light of litigation in the retirement plan space.
- Does ERISA apply? Consider conducting a fresh assessment of any voluntary benefit offering to determine whether it satisfies the DOL safe harbor as a non-ERISA voluntary plan and why.
- Fiduciary process and governance. Consider instituting an objective, prudent, repeatable process for carrier and product selection, along with periodic benchmarking/monitoring of premiums, fees, commissions and loss ratios. Echoing the earlier wave of retirement plan fee litigation, deficiencies in RFP cadence and benchmarking/monitoring were repeatedly highlighted in the complaints.
- Commission and compensation controls. Consider developing a comprehensive map of all direct and indirect compensation flows to your plan service providers (e.g., brokers/consultants and carriers), benchmark them against comparable plans to assess value, and proactively address any identified concerns.
- Form 5500 reporting and documentation. If your voluntary benefits do not satisfy the DOL’s safe harbor requirements, ensure accurate, timely and comprehensive reporting for these benefits on the Form 5500.
