October 2026 - ERISA Health & Welfare
Overview:
Between June 2025 and July 2026, plaintiffs have filed four ERISA class actions in federal court challenging health plans with higher-premium PPO options as being “financially dominated” by a cheaper plan option. Each case was filed under ERISA 502(a)(2) and (a)(3) involving self-insured, employer sponsored medical plans offering PPO options sharing the same network and covered services.
The complaints rest on the same three counts under ERISA § 404(a): imprudently offering and keeping a dominated option, failing to disclose the financial implications, and failing to monitor delegated fiduciaries.
The cases are (i) Barbich v. Northwestern University (N.D. Ill., filed June 20, 2025) (ii) Green et al v. University of Rochester et al, No. 6:25-cv-06499 (iii) Ebarle v. Abbott Laboratories (N.D. Ill., filed June 10, 2026) and (iv) Johnson v. Abbott Laboratories (N.D. Ill., filed July 14, 2026).
Notably, Green differs from the other cases in that plaintiff’s raise summary plan description requirements under ERISA § 102(a) (29 U.S.C. § 1022(a)), as well as the general duty to inform. We’ll see how the Green litigation progresses, including how it relates to summary plan description updates.
Importantly, in addition to naming the plan sponsor, some of these cases name individual defendants such as the Executive Director of Benefits and the Chief Human Resources Officer. This serves as a reminder that individuals, not just plan sponsors, can be subject to ERISA litigation.
The only case with a ruling as of the date of this insight is Barbich where the court denied defendant’s motion to dismiss.
We will continue monitoring the cases and provide updates as material information becomes available.
Barbich v. Northwestern University
In Barbich, the Northwestern University Employee Welfare Plan offers three PPO tiers: (i) Premier (low deductible), (ii) Select (mid deductible) and (iii) Value (high deductible). Plaintiffs allege the Premier PPO is financially dominated because the other tiers, despite the Premier low deductible, cost less in total taking into account premiums and cost sharing. According to the complaint, a plan participant could pay significantly more in Premier plan premiums overall when adding premiums and cost sharing. Plaintiffs allege defendants breached their ERISA fiduciary duties of monitoring, prudence, and should have disclosed the financial impacts to plan participants.
Defendant’s motion to dismiss was denied because the plaintiffs sufficiently alleged Northwestern breached its ERISA fiduciary duties. Specifically, the court held: (i) plaintiffs have standing because they plausibly pled injury in fact in form of excessive healthcare expenses (ii) further factual inquiry is needed to determine whether Northwestern was acting in a Settlor rather than Fiduciary capacity (note the Settlor v. Fiduciary decision has not yet been ruled upon and can be raised again by defendants) (iii) sufficiently alleged plausible facts of financial domination and (iv) plaintiff’s sufficiently alleged that defendant’s failed to disclose the financial domination imbalance to plan participants.
Takeaways for Plan Sponsors:
1. Continue monitoring the PPO cases discussed above.
2. Consider creating a Health and Welfare Committee and draft a committee charter.
3. Document and maintain a prudent health and welfare process.
4. Consider updating Summary Plan Descriptions (SPDs) accordingly.
5. Ensure benefits communications and enrollment materials are clear and aligned.
6. Contact Momentum Advisors to assist with your health and welfare needs.
Reach us via LinkedIn or email at: info@momentumadvisors.law