New lawsuits challenge ERISA exemptions for voluntary benefits

The four lawsuits at the center of this three-part series are:

• Lab. Corp. of America Holdings Group Benefit Plan, et al. v. Lab. Corp. of America Holdings, Willis Towers Watson US LLC, et al., No. 25-CV-15583, 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., No. 25-cv-10659, 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., No. 25-cv-15578, N.D. Ill. (2025)
• United Airlines Consolidated Welfare Benefit Plan, et al. v. United Airlines, Inc., Mercer Health & Benefits Admin., LLC, et al., No. 25-cv-15581, N.D. Ill. (2025)

Why voluntary benefits?

All four complaints raised a threshold question that many employers and advisors may find uncomfortable: are voluntary benefit plans truly exempt from ERISA?

Recent data suggests that more than 80% of worksite and voluntary benefit plans are subject to ERISA, despite widespread reliance on the voluntary plan safe harbor. According to the plaintiffs, that reliance is often misplaced because many plan designs fail to satisfy the exemption’s requirements.

As a result, the alleged violations across the four cases are strikingly similar and stem from a common theme: a lack of fiduciary compliance driven by the assumption that ERISA does not apply.

Common fiduciary allegations across the cases

Putting the exemption issue aside, the core fiduciary claims focus on fundamental duties of prudence and loyalty. These claims include:

• Failure to prudently select and monitor service providers, including failure to conduct RFPs or competitive bidding;
• Failure to monitor, control, and leverage plan bargaining power to limit broker and consultant compensation, resulting in allegedly excessive fees; and
• Knowingly engaging in prohibited transactions and self-dealing.

Taken together, these allegations underscore the growing expectation that voluntary benefit plans, as well as health and welfare benefit plans more generally, should be governed with the same level of fiduciary rigor long applied to retirement plans.

Why advisors are especially exposed

These cases may have a greater impact on advisors and brokers than prior fiduciary duty litigation for several reasons. Voluntary benefits are frequently misunderstood from a compliance standpoint, which has led to informal practices that may not withstand ERISA scrutiny. Participant harm may also be easier to allege and quantify, particularly through the use of loss ratios and industry practices that treat voluntary benefits as revenue streams.

In addition, the lawsuits were filed by a prominent ERISA plaintiff firm with deep experience in retirement plan litigation, signaling a deliberate expansion of its focus into welfare plans. At their core, these cases challenge whether voluntary benefit plans are being mismanaged under a false assumption of ERISA exemption and whether advisors and brokers acting as functional fiduciaries are participating in prohibited transactions.

What advisors can do now to protect themselves

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

• Re-evaluating whether voluntary benefit arrangements truly meet the ERISA safe harbor, and clearly documenting that analysis;
• Clarifying fiduciary status in engagement agreements, including what decisions the broker does — and does not — control;
• Increasing transparency around compensation, including commissions, overrides, and carrier-paid incentives tied to voluntary benefits;
• Supporting or recommending competitive selection processes, such as periodic RFPs or benchmarking, even where not historically required;
• Documenting recommendations and rationale, particularly when narrowing carrier options or product designs; and
• Avoiding practices that could be characterized as self-dealing, especially where revenue considerations influence plan design or carrier selection.

Perhaps most importantly, brokers should assume that fiduciary conduct, rather than fiduciary titles, will drive legal exposure, and adjust their practices accordingly.

Looking ahead

All four cases call into question whether most voluntary benefit plans offered by employers are truly exempt from ERISA or are instead being administered without appropriate fiduciary oversight. As these lawsuits develop in 2026, a central issue will be whether brokers, by selecting, screening, or recommending benefit options, are exercising fiduciary discretion and therefore subject to ERISA’s prohibited transaction rules.

In a future article in this series, we will discuss the practical steps plan sponsors can take to protect themselves, including strengthening governance structures, improving documentation practices, and enhancing vendor oversight to help reduce fiduciary risk in an increasingly active enforcement environment.