What Schlichter Lawsuits Mean for Health Plan Fiduciaries
Executive Brief
Last week, the Schlichter Bogard law firm, the same plaintiffs’ attorneys who transformed retirement plan governance through two decades of ERISA litigation, filed a wave of health plan lawsuits against major employers and benefit consultants.
This was not a legal moment. It was a governance reckoning.
The cases didn’t create new fiduciary duties for health plans. They made existing ones unavoidable.
The response was immediate. LinkedIn engagement surged. Conversations moved quickly. More than 1,000 people joined the Health Rosetta webinar (replay here with excellent legal insight from Julie Selesnick).
People weren’t reacting to a lawsuit. They were recognizing a pattern.
Retirement fiduciaries had twenty years of warnings. Health plan fiduciaries just got theirs.
Retirement Fiduciaries Had 20 Years of Warnings
This Is a Governance Moment, Not a Legal One
For years, employers operated under an implicit presumption of reasonableness in retirement and health plans.
Vendor relationships felt established. Compensation felt market-based. Decisions felt defensible because many others made similar choices.
Retirement plan litigation ended the presumption in that market.
Health plans just crossed the same line.
The most important change is not enforcement. It’s an expectation. Fiduciary decisions must be explainable. Reasonableness must be demonstrated. Process matters as much as outcome.
Fiduciary risk doesn’t come from imperfect answers. It comes from having no disciplined way to explain them.
Why Good Intentions Were Never Enough
Most employers aren’t reckless. Many care deeply about employees. Most rely on advisors they trust.
Yet governance often drifted.
Compensation became indefensible. Benchmarking became nonexistent. Procurement became rubber-stamped. Oversight became outsourced.
Not because leaders stopped caring. Because fiduciary basics quietly fell out of practice.
Good intentions do not scale without structure.
When governance weakens, value shifts away from participants quietly and consistently. No villain required. No bad actor needed.
The Accountability Gap
One reason fiduciary basics receive limited attention is simple.
They don’t often produce obvious upside for employers.
These disciplines exist for one reason. They protect participants.
ERISA was designed for transparency and prudence. Not employer ROI.
The gap between employer incentive and participant protection is precisely what fiduciary duty was designed to close. When governance improves, excess tends to come out of the system. The value flows back to employees.
The question is not whether this benefits employers. The question is whether fiduciaries fulfilled their obligations to participants and their beneficiaries.
The First Move Is Clarity, Not Change
Moments like this invite reaction.
Vendor changes. Urgent RFPs. Public signals.
Those moves often create noise without improving readiness.
The first move is quieter.
Can leadership clearly articulate who holds fiduciary responsibility? Can decision makers explain how compensation is evaluated? Can the organization describe how alternatives were considered? Can oversight be demonstrated without scrambling?
Prepared organizations can answer basic fiduciary questions calmly.
Readiness is not speed. Readiness is clarity.
What This Year Is Really About
This year is not about avoiding headlines. It is about building systems.
When governance is sound, ethics follow. When governance weakens, value leaks quietly.
The moment last week created attention. What happens next determines outcomes.
Participant-first results are not achieved by intention. They are produced by governance.
“Fulfilling fiduciary duties is an essential part of good governance and legal risk management that results in superior purchasing decisions.
Julie Selesnick, Founder at Health Plan Legal Counsel
What to Do First Thing Monday
Identify your fiduciary committee. If you don’t have one, start there. If you do, confirm all the members understand their fiduciary duties.
Pull your broker disclosure. Can you explain how your broker is compensated? If the answer requires an email to your broker, you have a problem.
Forward this newsletter to your CEO, CFO, or General Counsel. The Schlichter cases will land on their desks eventually. Better they hear about governance now than liability later.
In Closing
The lawsuits filed last week will work their way through the courts. Outcomes will take years.
But the governance question is already answered.
Fiduciaries who can explain their process will sleep better than those who can’t.
This has always been true. Now it’s visible.
Here’s to clearer thinking, stronger plans, and better outcomes for the people who rely on us.
All the best,
P.S. Next week: the specific contract terms and advisor practices triggering these claims. If you’re mid-renewal or renegotiating, you’ll want this.
