Understanding Fiduciary Duties in Healthcare Plans

💊 Your pharmacy benefit might be the biggest fiduciary blind spot in your plan. 👩⚖️ Since 2024, employers have been sued — personally, as named fiduciaries — for not knowing what their PBM actually charged versus what it actually paid. ❌ Spread pricing. ❌ Hidden rebates. ⬛️ A black box where "trust us" was the audit trail. That's not prudence. That's exposure. 😳 Here's the test #ERISA actually applies to your pharmacy benefit: → Prudence — can you prove the price was fair? Not "trust us." Prove it. → Loyalty — is anyone profiting from a markup you can't see? → Reasonableness of compensation — do you know exactly what you're paying for, and why? 🛜 The Cost Plus Drugs Affiliate Pharmacy Network at Mark Cuban Cost Plus Drug Company, PBC was built to pass this test: ✅ Same price to the plan and the pharmacy. No spread to hide. ✅ Revenue comes from a fixed, disclosed fee — not from rebates negotiated behind your back. ✅ Every claim is auditable, because there's nothing structured to obscure. ➡️ And you don't have to rip out your current PBM to get it. 🔩 It bolts directly onto the plan you already have — your contract, your network, your formulary — layered in rather than replacing what's working. ✅ Prudence becomes verifiable. ✅ Loyalty becomes aligned. ✅ Reasonableness becomes transparent. That's not a sales pitch. That's a fiduciary file you can hand to your auditor without flinching. ✅ Ask any of our PBM Team ups about our bolt on - and take one more step to check the box on your fiduciary duties... 🔗 Below, to our entire series on ERISA, Fiduciary Duties, and PBMs for your review ⬇️

If you currently have—or have ever had— Cigna Healthcare as your TPA, you might want to read this. Cigna has taken the affirmative position in recent legal pleadings that, because they process claims and pay providers, they owe fiduciary duties to plan sponsors: "Cigna was expressly delegated discretionary authority to process claims…[therefore]... it owes fiduciary duties to the Plan sponsors.” (Case No. 8:20-cv-00269, Cigna Opp. to MSJ) They also argue that their ASO Agreements—which require them to take “all reasonable steps to recover overpayments”—impose a fiduciary obligation to pursue recoveries from providers: “It is also obligated as a fiduciary… to take all ‘reasonable steps’ necessary to recover funds…” (Same filing, citing ASO terms) These are Cigna’s own words—not mine. Of course, the fiduciary hat only seems to come out when it’s convenient: when Cigna wants standing in court. But when it comes to liability for failing to safeguard plan assets? Suddenly, it’s just an arms length contractual relationship. We’ve seen this game before. Anthem, Aetna, and other Blues plans have all argued that this exact same language does not confer fiduciary status, either expressly or in practice as a functional fiduciary. So which is it? If you’re an employer with a self-funded health plan, I implore you to please take five minutes and look at your ASO Agreement. I’m 99.9% sure it says your TPA has discretionary authority to process claims, pay providers, and is required to take “reasonable steps” to recover overpayments. If you have Cigna, it’s especially clear where their legal department stands on the meaning of these terms —at least when it suits them. For non-Cigna clients, you might want to consider showing your TPA rep the pleadings from this case, highlighting these particular provisions. Ask whether they’d agree with Cigna’s position—or if they’d take the opposite stance if the facts were flipped. The implications of this argument are significant. If carriers want to assert fiduciary status to gain access to the courts, then they should be held to the full weight of that responsibility—not only when it benefits them, but every time they act on behalf of your plan.

If you see these words in your Administrative Services Agreement… pause. They’re not just legal jargon, they’re the reason employers lose fiduciary control of their health plan. “120 days post-payment” Audit control is delayed “PBI” or “Confidential trade data” No transparency on payment logic. “Network determinations final” Plan can’t question overpayment. “External vendor must be approved” Carrier gatekeeping. “Not a fiduciary” You bear the risk, they hold the power. These clauses transfer authority from the Plan Sponsor to the Carrier, yet the fiduciary liability remains on the employer. If you’re self-funded, make sure your contract gives you: *Access to claims data *The right to audit (pre- or post-payment) *Control over final payment decisions You can’t manage what you’re not allowed to see. Take back control of your health plan. US Beacon #ClaimsIntegrity #SelfFundedPlans #ERISA #Transparency #USBeacon #AuditYourClaims

💥 The Perils of Prior Authorization: Time to Call Out the Right Party Doctors and patients are going public with stories of absurd prior authorization denials—and the broken peer-to-peer processes behind them. But there’s a critical piece missing in these conversations: They’re calling out the insurance company acting as a third-party administrator (TPA), not the employer—who is actually in charge. 📌 Under ERISA, the employer is the plan’s fiduciary—with ultimate authority and responsibility for all plan decisions. ➤ 29 U.S.C. § 1102(a)(1) – requires each plan to name a fiduciary who controls and manages the plan. ➤ 29 U.S.C. § 1002(21)(A) – defines a fiduciary as anyone with discretionary authority over plan administration. ➤ 29 U.S.C. § 1002(16)(A) – defines the employer as the plan administrator, unless otherwise designated. That means employers are not just “buyers” of benefits. They are legally accountable for what happens inside their health plan—including what their vendors do. 🧾 Your company’s plan documents (check the legal packet you get at open enrollment) spell this out clearly. The employer is the Named Fiduciary and Plan Administrator. So if you’re facing a denial that defies logic: • 📧 Send the peer-to-peer notes or call recordings (if legal) directly to the CEO and HR executive. • 🎯 Point out that the employer hired the vendor making these decisions. • 🔁 Ask the CEO to override the denial—which they have the contractual and fiduciary authority to do. Make it a personal appeal. Let’s be clear: It’s not the “BUCA” plan (Blue, United, Cigna, Aetna). It’s The ACME Manufacturing Health Plan, administered by [Insert TPA Name]. Time for accountability to match the authority.

“If you don’t control the contract, the contract controls you.” That phrase has stuck with me over the years—not because it sounds good, but because I’ve seen the damage when it’s ignored. Too often, benefit plans are built around administrative convenience, not strategic control. RFPs get released without the right guardrails. Contracts get signed without full disclosure. And decisions that impact the health and finances of thousands are made without access to the very data fiduciaries are required to oversee. Post-CAA 2021, that’s not just risky—it’s noncompliant. Every plan sponsor should be demanding: • Full compensation disclosures before a contract is signed • Explicit data rights with no gag clauses • Clarity on RxDC reporting and fiduciary responsibilities • The ability to carve out and control high-cost services (not limiting access to care however being smart with purchasing options ie J-Codes, Surgery etc) • Commitments to work with your oversight vendors, not around them The TPA might run the plays—but if you’re not calling them, you’ve already lost the game. Control the contract, or the contract will control you. This is why our work goes beyond benchmarking or vendor management. It’s about real oversight. Real leverage. And real outcomes for the people who depend on these plans to work. If you’re not asking for these things, it’s time to start. And if your current partners can’t or won’t give them to you… you might not have a partnership at all. #wefixyourhealthcare #fiduciaryduty #CAA2021 #ERISA #benefitsstrategy #transparency #leadership BenefitsDNA

From "Largest Undisclosed Risk" to Major Class Action: This risk hasn't been "undisclosed" for years which is particularly critical for NACD (National Association of Corporate Directors) members since boards have personal legal liability when there are breaches of fiduciary duty. When I warned about ERISA fiduciary risk in my book nearly a decade ago, a Big 4 risk management leader called it "the largest undisclosed risk I've seen in my career." Today, that risk is manifesting in class actions targeting major employers. What's striking is that the Association of Corporate Counsel had already sounded the alarm. The attached article reaching 1.5M corporate legal professionals in The Docket became their #1 trending piece for over a month, making clear the fiduciary obligations under the CAA 2021 -- legislation that many experts believe is the most significant shift in employer-based health plans since 1943. The complaint against JPM is particularly ironic, as they host the annual JPM Healthcare Conference where middlemen openly present their strategies to extract maximum value from employer health plans. For over 7 years, Health Rosetta, a Public Benefit Corporation Advisors have provided counsel to 1000s of employers/unions ensuring they meet fiduciary obligations through tools like the Compliance Assessment and Plan Grader™️. Further, #HealthRosetta gave away its IP to the Nautilus Health Institute which houses the open source resources for procurement, contracting and data use and data infrastructure tech to ensure it's available to every employer whether they have 10 or 100k employees. This is a key driver of why employer attendance at RosettaFest has grown 75x since 2022. These employers are proving something remarkable: ERISA compliance is the only regulatory requirement I know where greater compliance simultaneously: ⒈ Improves employee health outcomes ⒉ Benefits the employer's & employees bottom line ⒊ Creates "HeRo Dividends" that have funded: ✅College education ✅Dependent coverage ✅Home solar installations ✅Unprecedented bonuses/raises ✅Healthy food subsidies ✅Daycare benefits Forward-thinking organizations embracing their fiduciary responsibilities build healthier, more financially secure workforces & businesses while creating transformative opportunities for their people. The path forward is clear, well-documented, and proven. Smart employers are moving quickly to seize this opportunity to transform their approach to employee health benefits, knowing that better compliance means better outcomes for everyone. If it takes a few class action cases to wake the sleeping (employer) giant, that's a small price to pay for how high-performance #healthplans are restoring the American Dream that healthcare has crushed over the last 3+ decades. Do you think it's a net positive that a few jumbo employers are targeted by class action attorneys? #EmployeeBenefits #HealthcareReform #ERISA #CorporateGovernance

📢 Employers — follow the money! The Consolidated Appropriations Act of 2021 gave you a powerful tool: the ability to see how and what your covered service providers are being paid. That transparency requirement was intentional it’s about giving you the information you need to act as a prudent fiduciary over your health plans. But here’s the key point: compensation may come from other places in the form on voluntary benefits. Technically compensation disclosure on this business is not covered under the CAA 2021 disclosure rules but it matters. You should be asking for full transparency on all compensation they collect, whether direct, indirect, or from related business lines. Recent data (including NAPA-Net’s coverage of the latest trend in ERISA litigation) reminds us that there’s value in digging deeper. Brokers and carriers are increasingly selling voluntary products and ancillary services — and not all of the revenue streams are obvious at first glance. If your vendor is benefiting from those arrangements, that revenue can influence their incentives in ways that don’t always benefit your plan or your participants. This isn’t about lawsuits. It’s about acting with due diligence, understanding conflicts of interest, and building defensible fiduciary processes that protect your organization and the people you serve. Need help understanding what to ask for and how to evaluate provider compensation in a fiduciary-sound way? Let’s talk. https://lnkd.in/eWkBa-ae

We’ve Been Here Before This is the first installment in a multi-part series by Judi Group examining the evolving legal and regulatory landscape confronting health plan fiduciaries. For years, excessive fee litigation in 401(k) plans followed a familiar pattern: opaque compensation, limited scrutiny, a few early “test” cases, and then an avalanche of copycat lawsuits. Health plans may now be at the beginning of that same story. Plaintiffs are beginning to apply those same excessive fee, fiduciary oversight, and prohibited transaction theories to employer-sponsored health plans—particularly in the prescription drug and PBM context. The 401(k) cases were built on two simple questions: (1) Did the plan pay more than it should have? (2) Did fiduciaries fail to monitor those costs prudently? Those same questions are now being asked in the health plan context—but with an important difference: the underlying compensation is much harder to see. PBM compensation is not limited to administrative fees. It can include rebates, spread pricing, formulary payments, affiliate revenue, GPO flows, and other indirect payments. Similar challenges exist on the medical side, where compensation is often embedded in administrative and network arrangements, making the true cost of services difficult to determine. And that is exactly why this area presents risk. In the retirement plan space, ERISA litigation exploded once fees were measurable, comparable, and capable of being challenged in court. The health plan market is now moving in that same direction. New disclosure requirements, CAA 2026 provisions, FTC scrutiny, and emerging case law are making compensation visible enough to evaluate and challenge. The litigation environment is already shifting. In 2025, approximately 22% of ERISA lawsuits involved welfare plans, with increasing focus on PBM cost structures, fiduciary oversight, and prohibited transaction theories following Cunningham v. Cornell. If the 401(k) experience is any guide, once plaintiffs identify a repeatable theory, and courts allow some cases to proceed, litigation can accelerate quickly. Going forward, the key questions will be whether fiduciaries can demonstrate that: • their vendor arrangements involve necessary services • those arrangements are reasonable • the compensation paid is reasonable And that leads to more difficult issues: if compensation has been opaque for so long that benchmarking may not exist, how does a fiduciary determine what is “reasonable”? Jeffrey Hogan Jason Aulakh Christine Arnold Chris Deacon Justin Leader Jamie Greenleaf AIF, CBFA, C(k)P

Employers offering health benefits are in a tough spot right now. How can they meet CAA requirements and their fiduciary duty? --- Plan fiduciaries are in the spotlight since the passage of the Consolidated Appropriations Act (CAA) requirements in 2021. This is crucial information for any employer or plan sponsor, particularly related to the outcomes of the J&J and Wells Fargo lawsuits (links to summaries these in the comments). --- Here are some big, tangible takeaways for plan sponsor fiduciaries: Access to data -#Employers don’t have their data, but access to the data is absolutely crucial. -Even if they get the data, they generally don’t know what to do with it. -It's not simple to get their data, so employers aren’t sure how much to fight for the data to meet their fiduciary duty. They're watching the J&J and Wells Fargo lawsuits to decide how much they should fight for it. There doesn't seem to be real urgency yet, but that will change as soon as we see movement in the lawsuits. Contracts -Employers need help negotiating good contracts. The exact definitions are vital. I've been seeing this first hand in PBM RFPs where there can be no tangible, auditable definition of a brand drug or a rebate. It can take a significant amount of redlining to craft an auditable contract. -All vendors must provide data on all compensation disclosure (aka compensation transparency). This is particularly important when working with vertically integrated companies because the other vendors were chosen with no bid contracts--employers need to know compensation for everyone. -The current pharmacy reimbursement model (AWP discounts, MAC pricing list) may be strongly questioned by employers if these lawsuits go forward. In #pharmacy, it’s pretty easy to see cash prices now with discount cards or the Mark Cuban pharmacy. Fiduciary duty -Employers need a #fiduciary committee. -Being a healthcare benefits fiduciary isn’t straightforward because of the flexibility in benefits. It's not as straightforward as the retirement benefits lawsuits in the past. -There's a fiduciary duty to execute audits or ongoing monitoring of vendors. -There are potential risks for brokers and consultants too, particularly those with conflicts of interest. --- #USHealthcare doesn’t function like any other industry. The barriers and lack of transparency can make it difficult (or impossible) for a plan sponsor to make informed decisions. What else are people doing to meet CAA requirements? Are you seeing traction?