Inflation, wage pressure, rising drug costs, and tariffs on products and supplies are squeezing health plan budgets. As costs climb, so does legal risk based on the potential impact on plan participants and beneficiaries.
But one move can reduce both risk and cost: rigorous health plan fiduciary compliance.
And here’s the part no executive can ignore:
Personal Liability
Board directors and executives are now directly in the line of fire, facing personal liability for fiduciary failures tied to employer-sponsored health plans.
If you’re in a leadership role, health plan fiduciary risk is no longer an administrative back-office issue. It’s a boardroom priority.
Overlooked Risks
Fiduciary liability is no longer theoretical. Health plans are now in the legal crosshairs, just like retirement plans have been.
Financial Risk: Employers are overpaying by $2M–$3M per 1,000 employees due to contract mismanagement and opaque pricing.
Personal Liability: Executives and board members are being named in lawsuits—and courts are letting them proceed.
Litigation Risk: Class actions have been filed against companies like Johnson & Johnson and Mayo Clinic over poor pharmacy and mental health benefit oversight.
Legal Complexity: New lawsuits are testing the boundaries of fiduciary standing—historically a high and murky bar. Yet, each judicial pushback gives plaintiffs the chance to refine their case and eventually cross over that bar.
No Cause for Celebration: When employers claim “victory” after a standing challenge, they’re missing the point. These are procedural steps, not wins on the merits. The underlying facts consistently point to lax compliance harming employees and costing employers money.
New Case Spotlight: JPMorgan Lawsuit
A new class-action suit was filed against JPMorgan Chase, focused squarely on breach of health plan fiduciary duty.
The defendants in this case are notable: Virginia “Ginni” Rometty (former IBM CEO), Stephen Burke (former NBC CEO), Todd Combs (GEICO CEO), Linda Bammann (Head of Risk Committee), and Bernadette Branosky (Head of US Benefits).
JPM Directors and Executives As Named Defendants
Even Fortune 50 firms with experienced leaders are not immunne. If they’re exposed, so are you. The liability is personal and direct.
Like the cases against Johnson & Johnson and Wells Fargo, the JPMorgan case alleges the company failed to apply prudent oversight or follow a disciplined procurement process for its pharmacy benefit plan.
But what sets this case apart is this: JPMorgan was warned.
JPMorgan’s purchasing association flagged they were overpaying for specialty medications from CVS—yet they didn’t act. Ignoring those warnings, according to the plaintiffs, caused employees to incur avoidable, excessive drug costs. It may also make some plaintiff attorneys very rich.
The JPMorgan defendants now join the 14 individual executives and members of the plan committee named in the Wells Fargo case. To further complicate the impact of personal liability, these named defendants will need to hire their own attorneys to represent them in the matter.
These cases are a stark reminder fiduciary responsibility includes not just managing finances—but acting in the best interest of plan participants and beneficiaries when clear risks are brought to light.
Strategic Advantage: Compliance Pays Off
This is where compliance and embracing fiduciary responsibility delivers a clear, measurable return on investment.
💰 Reduce Wasteful Spending: Prudent oversight reclaims millions lost to mismanagement and opaque pricing.
📈 Elevate Benefits: By strategically designing your plan, you can offer superior benefits to attract and retain the best employees.
😊 Drive Productivity: A compliant health plan leads to healthier employees with improved productivity and less absenteeism.
Health plan compliance can be a powerful lever for tangible business gains. Unlike many areas of compliance, this one delivers ROI.
It’s a rare opportunity where doing the right thing also results in a significant financial and competitive advantage.
Health plan compliance is simply good business.
What Strong Fiduciaries Do
The JPMorgan lawsuit serves as a stark reminder: even high-profile executives are not immune. Personal liability is real and it’s escalating. You wouldn’t ignore a smoldering fire in your building—don’t ignore this either.
Your career, your financial security, and your organization’s well-being depend on it. Act decisively. Protect yourself and your team.
Do these 6 things now:
1️⃣ Fiduciary Committee: Establish with board resolution and charter
2️⃣ Delegation: Ensure fiduciary duties are delegated by the board
3️⃣ Education: Inform and train fiduciaries on their duties and risks
4️⃣ Mitigation: Review contracts and claims for risks and savings
5️⃣ Protection: Obtain insurance since fiduciaries are personally liable
6️⃣ Monitor: Measure and report on plan performance regularly
Now Is the Time to Act
With costs rising and scrutiny increasing, acting now protects your organization’s finances and your leadership team. Fiduciary compliance reduces personal liability while delivering real business value.
Take this risk off the table. Reap the benefits.
📣 Let’s build a future where transparency, trust, and fiduciary duty go hand in hand.
💸 SPECIAL OFFER: Subscribers to this newsletter receive 10% off any Validation Institute service. Use code FIDUCIARY10 at checkout.
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📬 Feel free to forward this offer to your broker, PBM, or other vendors. Don’t hesitate to tell them you will favor validated vendors going forward. Strong compliance and better benefits begin with validation.
Don’t be a bystander. Change the status quo and reap the benefits of The Health Plan Compliance Advantage.
