Plaintiffs’ attorneys who bring excessive fee class action lawsuits under ERISA have found a new target – supplemental benefits, such as hospital indemnity, critical illness, or accident coverage that are 100% employee-paid (often referred to as “voluntary benefits”). 

In late 2025, four class action lawsuits were filed attacking the routine practice of employers retaining brokers to place and manage voluntary benefit plans.  The complaints allege that employers breached their fiduciary duties and engaged in “prohibited transactions” under ERISA in several ways, including the following:

• Failing to follow a meaningful process for selecting and monitoring the brokers responsible for placing voluntary benefits;
• Retaining brokers with unreasonable commission fee structures; and
• Causing plan participants to pay excessive and unreasonable premiums for products with low aggregate claims payments.

The lawsuits are not limited to employers.  The complaints further contend that the brokers themselves are functional fiduciaries under ERISA because they exercise discretion in recommending, implementing, and managing the voluntary benefit plans—and then violated their fiduciary duties by steering plans toward arrangements that allowed the brokers to pay themselves excessive commissions.  Because these commissions were paid entirely out of the premiums for the voluntary benefits (which were 100% paid by employees), the complaints allege that plan assets were impermissibly used and the value of the benefits were diminished.   

Taken together, these lawsuits reflect heightened scrutiny of voluntary benefit arrangements and underscore a growing trend of litigation alleging violations of ERISA section 406, which generally prohibits transactions between a plan and related parties, known as “parties in interest,” while allowing certain exemptions if specific conditions are met.  In Cunningham v. Cornell, the Supreme Court held that plaintiffs are only required to plead the elements outlined in section 406 to allege that a party-in-interest prohibited transaction occurred and do not have to address whether a prohibited transaction exemption under ERISA section 408 applies.  As previously anticipated, the Cunningham decision appears to have emboldened the plaintiffs’ bar, and the recent lawsuits targeting voluntary benefit plans illustrate that trend.

You can read our article on the Cunningham ruling here - Cunningham v. Cornell: Supreme Court Lowers Bar for ERISA 406 Claims | Groom Law Group.

While the lawsuits are in the early stages, they are being closely watched.  If you would like to discuss the lawsuits or their implications, please contact your Groom attorney for further insight.  

“It is especially important that prudent fiduciaries investigate premiums, commissions, and brokerage fees to determine whether fees are reasonable in voluntary benefit plans because participants are paying the full cost.”

For your interest and convenience, here are the four class action complaints:

Brewer v. CHS/Community Health Systems, Inc., et al.
Fellows v. Universal Services of America, LP, et al. 
Braham v. Laboratory Corporation of America Holdings, et al.
Pimm v. United Airlines, et al.