The landscape of healthcare benefits administration just shifted significantly. On December 23, 2025, Schlichter Bogard LLC filed its first healthcare ERISA cases, the law firm famous for transforming the 401(k) industry through aggressive fiduciary litigation.
For benefits administrators like Ameriflex and the employers we serve, this represents a critical moment that demands attention.
Why This Matters to Benefits Administrators
Schlichter Bogard isn’t just any law firm. With three unanimous Supreme Court victories and over $750 million in settlements from retirement plan cases, they’ve proven they don’t pursue quick wins. They establish legal precedents that reshape entire industries. When they entered the 401(k) space, major recordkeepers restructured their business models, fee compression became standard, and fiduciary oversight went from optional to mandatory.
Now they’ve turned their attention to healthcare benefits, and this time they’re doing something unprecedented: naming benefits consulting firms as direct defendants, not just employers.
The Core Issues
The lawsuits target voluntary benefits programs at United Airlines, Laboratory Corp, CHS/Community Health Systems, and Universal Services of America. But the allegations against their consulting firms (Gallagher, Mercer, Lockton, and Willis Towers Watson) reveal systemic problems that affect the entire industry:
Excessive Commissions: The complaints show consultants earning 22% to nearly 40% of premiums, far above the typical 10% industry standard. In some cases, Mercer received $14 million from United Airlines employees, averaging 36% of premiums.
Unsustainable Loss Ratios: When only 25-35 cents of every premium dollar goes to paying claims, with the rest consumed by commissions and administrative costs, the math simply doesn’t support fiduciary prudence. One analytics expert noted it becomes “impossible for somebody to claim that these are reasonable” when payouts are that low.
Bundled Conflicts: Major medical carriers increasingly bundle voluntary benefits with core coverage, creating compensation structures that tie broker payments across product lines. This creates fiduciary duties that many have tried to avoid by treating voluntary benefits as separate from core plan obligations.
The Voluntary Benefits Trap
Many plan sponsors have assumed voluntary benefits fall outside their core fiduciary responsibilities since employees pay premiums through payroll deduction. However, when carriers bundle these products with medical coverage and consultant compensation spans product lines, those voluntary benefits become part of the ERISA fiduciary equation.
The Consolidated Appropriations Act of 2021 increased scrutiny on broker compensation for medical plans, and experts have observed consultants responding by pushing more compensation into voluntary benefits, exploiting the perception these products operate outside rigorous disclosure requirements.
The Schlichter lawsuits argue that assumption is wrong.
What Plan Sponsors Should Do
As a trusted benefits administrator, Ameriflex recognizes that our clients need clear guidance during this transition. Here are immediate steps plan sponsors should take:
Request Complete Disclosures: Ask all brokers and consultants for full CAA 2021 disclosures, including compensation from voluntary benefits, book-of-business overrides, and any bundled commission structures.
Audit Voluntary Benefits: Review loss ratios, commission rates, and whether employees receive value proportional to premiums paid. If commissions exceed 15-20% or loss ratios fall below 60%, that’s a red flag.
Document Fiduciary Oversight: Create records showing your plan committee actively evaluates all benefit offerings, reviews vendor compensation, and makes decisions in participants’ best interests.
Restructure Conflicted Relationships: Move toward fee-based advisory relationships rather than commission-based structures that create inherent conflicts of interest.
The Path Forward
The pattern from retirement plan litigation is instructive. What started with cases against obvious bad actors eventually reached sophisticated Fortune 500 companies, established clear legal precedents at the Supreme Court, and sparked widespread industry transformation resulting in billions in annual fee reductions.
We’re now at the beginning of that cycle in healthcare benefits. Organizations that proactively address these issues will protect themselves from litigation while often achieving better financial results and superior benefits for their employees.
Those that continue business as usual may find themselves scrambling to respond after facing legal action.
As a third-party administrator, we’re committed to helping our clients navigate these evolving compliance requirements. This means advocating for transparency, supporting robust fiduciary governance, and ensuring that the programs we administer deliver genuine value to participants. Contact us today for more information.
*This article is for informational purposes only and should not be considered legal advice. Always consult with qualified legal and benefits professionals for specific compliance guidance.