For years, employers have treated fiduciary governance as a retirement‑plan issue. Formal committees, documented processes, and ongoing oversight became standard in response to excessive fee litigation and regulatory scrutiny. Health and welfare plans, for the most part, had been largely ignored. That is now changing.
Recent litigation makes clear that ERISA’s fiduciary standards apply with full force to group health plans, particularly prescription drug benefits, pharmacy benefit manager (PBM) arrangements, and voluntary benefit offerings. Employers that have not yet implemented formal health plan governance structures face growing legal risk.
These recent class action lawsuits allege that plan fiduciaries failed to act prudently in selecting and monitoring PBM and voluntary benefit vendors, negotiating pricing, and overseeing fees. While these cases are still working through the courts, they reflect a broader trend of plaintiffs’ attorneys now scrutinizing welfare plan processes, not just outcomes.
That risk increased further following the Supreme Court’s 2025 decision in Cunningham v. Cornell University, which reinforced that plan sponsors bear the burden of proving a prudent fiduciary process. In today’s environment, informal or undocumented decision‑making is increasingly difficult to defend.
ERISA defines fiduciary status broadly, and without clear delegation, fiduciary exposure can expand quickly. Employers are often the default plan administrator, which means that board members and senior executives may inadvertently become fiduciaries simply by approving vendors or overseeing benefits. Managers who make discretionary decisions regarding plan operations can likewise acquire fiduciary status unintentionally.
This exposure matters because ERISA fiduciary liability can be personal. Fiduciaries may be required to restore plan losses, pay civil penalties, cover attorneys’ fees, and, in serious cases, face removal from their fiduciary roles. Without a formal governance structure, litigation often results in depositions of board members and executives on highly technical issues such as PBM pricing models which will significantly increase defense costs and settlement pressure.
Establishing a dedicated health and welfare plan fiduciary committee is one of the most effective ways to manage this risk. When properly implemented and named in plan documents, a committee centralizes fiduciary responsibility in trained, informed individuals and creates clarity around decision‑making authority. This structure reduces inadvertent fiduciary status among personnel performing ministerial functions, and limits board and executive exposure to oversight responsibilities rather than day‑to‑day plan management.
ERISA permits fiduciary delegation when done prudently and accompanied by ongoing monitoring. While delegation does not eliminate responsibility entirely, it meaningfully narrows and manages fiduciary risk while improving the organization’s ability to demonstrate compliance.
Beyond litigation defense, a committee structure improves plan operations. Concentrating fiduciary expertise supports more consistent and well‑documented decisions, stronger vendor selection and monitoring, clearer separation between business decisions and fiduciary functions, and enhanced compliance with increasingly complex health plan regulations.
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