ERISA Litigation Is Expanding—and Plan Sponsors Should Pay Attention

Recent lawsuits against companies such as Johnson & Johnson, Wells Fargo, and JPMorgan Chase have challenged employers’ management of prescription drug programs. Allegations include inadequate evaluation of PBM arrangements, overpayment for medications, and shifting costs to employees. Inst Johnson & Johnson and Wells Fargo have been dismissed because the plaintiffs could not establish standing. However, in March 2026, a federal court allowed certain prohibited-transaction claims against JPMorgan to move forward based on allegations that employees personally overpaid for prescription drugs. The court dismissed other fiduciary claims, reinforcing that not every business or vendor decision is automatically a fiduciary act.

This distinction is important, but employers should not be reassured by early dismissals. These cases provide plaintiffs’ attorneys with guidance for future lawsuits. Complaints are becoming more detailed and focused on employers’ decision-making processes.

In Cunningham v. Cornell University, the U.S. Supreme Court held that plaintiffs bringing certain ERISA prohibited-transaction claims do not have to disprove every possible statutory exemption in their initial complaint. The plan sponsor may instead have to establish that the arrangement involved necessary services and reasonable compensation as part of its defense.

Practically, this makes it easier for lawsuits involving payments to recordkeepers, consultants, TPAs, PBMs, or other service providers to advance beyond the initial stage.

Employers may ultimately demonstrate that services were necessary and compensation was reasonable, but this requires evidence. Plan sponsors need more than a signed contract or renewal presentation; they must document provider selection, compensation evaluation, and performance monitoring.

Voluntary benefits, including accident, critical illness, hospital indemnity, and cancer coverage, are also under scrutiny. Recent lawsuits have challenged premium levels, commissions, broker compensation, and employers’ roles in selecting and administering these programs.

Employers may assume voluntary benefits carry little fiduciary risk since employees pay the full premium. However, this may not apply if the employer selects the carrier, negotiates the program, endorses coverage, receives compensation, or is heavily involved in administration.

Traditional retirement-plan litigation remains active, with claims involving recordkeeping fees, investment expenses, share classes, underperforming funds, and plan forfeitures. Often, the issue is not the decision itself, but the fiduciaries’ inability to demonstrate a prudent decision-making process.

An internal party should clearly identify who acts as a fiduciary, which decisions are fiduciary, and who has authority to make them. Delegating responsibilities to a broker, TPA, PBM, or investment advisor does not remove the employer’s duty to prudently select and monitor providers.

The Department of Labor states that plan fiduciaries must act solely in the interest of participants, use a prudent process, follow the plan documents, and ensure the plan pays only reasonable expenses.

Employers should understand how each major service provider is compensated, including direct fees, commissions, overrides, rebates, spread pricing, retained discounts, data fees, implementation payments, and other indirect compensation.

The question is not simply whether the employer pays the provider directly, but whether plan assets, participant premiums, or the plan’s economic value are used for compensation, and whether that compensation is reasonable. Plan sponsors should periodically compare fees, contract terms, pricing guarantees, and performance against credible alternatives.

Selecting the lowest-cost vendor is not always required. Service quality, disruption, clinical outcomes, employee experience, and administrative capabilities may justify a decision. The key is to document why the decision was reasonable.

Employers cannot effectively oversee a health plan if vendors control essential information. Plans should review contracts for restrictions on claims data, negotiated rates, provider information, pharmacy pricing, and compensation.

Federal law prohibits certain contractual “gag clauses” that restrict a group health plan’s access to cost and quality information, and plans generally must submit an annual compliance attestation.

Committee minutes, benchmarking reports, requests for proposals (RFPs), consultant recommendations, claims audits, and vendor performance reviews should present a consistent record. The goal is to be able to answer a basic question several years later:

Why did we make this decision, and what information did we consider?

ERISA does not require plan sponsors to predict the future or achieve the lowest possible cost on every claim. Fiduciaries can make decisions that do not work out exactly as planned.

Risk arises when important decisions are made without meaningful review, when there is overreliance on conflicted vendors, when compensation is not understood, or when plan monitoring cannot be demonstrated.

For plan sponsors, the lesson is clear: benefits governance must extend beyond selecting next year’s deductible and approving renewals.

Employers should manage health, retirement, and voluntary benefit plans with the same discipline as other major corporate expenditures. Establish processes, ask informed questions, review data, understand compensation, and document your reasoning.

The next wave of ERISA litigation may focus less on the quality of benefits offered and more on whether employers can demonstrate prudent management in the best interests of participants.

This article is for general informational purposes and is not legal advice.