The Fiduciary Reckoning: Why Employers Can’t Afford to Look Away

"You may not be interested in fiduciary responsibility, but fiduciary responsibility is interested in you."– (If Tolstoy was a CFO…)

For decades, employer-sponsored health plans were treated like a cost center with good intentions. You offered coverage. You shared the cost. You relied on your broker, carrier, and TPA to tell you whether the plan was “competitive” and “market-based.”

But in the post-CAA, post-COVID, post-delusion era of American healthcare, that strategy no longer works.

Here’s why: if you’re the plan sponsor, you’re the fiduciary—and the landscape around what that means is changing rapidly. What was once a passive HR responsibility has become an active legal risk, financial liability, and leadership imperative.

Let’s break down what’s driving this fiduciary reckoning and why so many employers are waking up—some too late.

📜 First, What Is a Fiduciary?

Under ERISA (Employee Retirement Income Security Act), fiduciaries must act “solely in the interest” of plan participants and beneficiaries. That means:

• No conflicts of interest

• A duty of prudence and loyalty

• Reasonable fees and services

• Documentation of decisions

Sounds like common sense, right? But here’s the kicker: most employer-sponsored health plans operate in ways that directly violate these principles—often without anyone realizing it.

Why? Because the entire supply chain is riddled with opaque contracts, hidden compensation, vendor self-dealing, and a complete lack of accountability.

🧨 What’s Causing the Fiduciary Pressure Explosion?

1. Litigation Is Coming

A wave of ERISA lawsuits are being filed by plan participants and class-action firms claiming that employers failed to manage their health plans prudently. Consider:

• Lewandowski v. Amazon (2024): Amazon was sued for allegedly allowing a PBM contract with inflated costs and no fiduciary oversight.

• Johnson v. Dartmouth-Hitchcock (2023): Accused of failing to negotiate reasonable hospital pricing for plan members.

• More than 20 cases in the last two years have targeted fiduciary mismanagement of plan pricing, fees, and pharmacy benefits.

2. Regulators Are Watching

The Department of Labor (DOL) has signaled increased enforcement of fee transparency under the Consolidated Appropriations Act (CAA). Meanwhile, the FTC, HHS, and DOJ are investigating anticompetitive practices by PBMs, brokers, and hospital systems. All signs point to greater scrutiny of employer-sponsored plans.

3. Your Vendors Aren’t Fiduciaries

Here’s the uncomfortable truth: your broker is likely not a fiduciary. Neither is your TPA. Neither is your PBM. Most are compensated through arrangements that may conflict with your obligation to act in the best interest of your employees.

So if no one else is the fiduciary… you are. And if you don’t know how your plan is priced, funded, or compensated, you may already be at risk.

🕵️‍♂️ Are You Making These Common Fiduciary Mistakes?

• Signing multi-year agreements you haven’t read

• Not asking for (or understanding) broker compensation disclosures

• Assuming your plan is compliant because it’s with a national carrier

• Letting vendors "benchmark themselves"

• Failing to audit pharmacy spend, pricing contracts, or admin fees

• Delegating oversight to people who don’t have the legal responsibility

If any of these hit too close to home, you’re not alone. But now is the time to act.

✅ What a Fiduciary-First Strategy Looks Like

To stay compliant—and reduce costs—you don’t need more complexity. You need more clarity. Start here:

1. Contract Transparency

Get your hands on all plan contracts: stop-loss, PBM, broker, TPA. Review them for language around indemnification, renewal clauses, pricing, and data access.

2. Compensation Disclosure

Under the CAA, brokers and consultants must disclose all direct and indirect compensation. If you haven’t received this in writing, request it immediately. And if the document is vague or incomplete—ask questions.

3. Performance Benchmarking

Establish KPIs and hold vendors accountable. That includes claim cost trends, Rx performance, utilization review, and high-cost claimant strategies.

4. Governance Framework

Form a formal Health Plan Committee, document your meetings, and retain minutes. Include legal review of all major vendor selections and renewals.

5. Fiduciary Alignment

Work with advisors who embrace fiduciary standards or are willing to put their compensation structure and recommendations in writing with full transparency.

🧭 Herb’s Take

Most employers don’t knowingly violate their fiduciary duties. But “I didn’t know” doesn’t hold up in court—or to your CFO, your CEO, or your employees.

The good news? The reckoning is also an opportunity. It’s a chance to finally take control of your healthcare spend, your strategy, and your impact.

If you're ready to shift from passive plan sponsor to proactive fiduciary, the right time isn’t “someday.” It’s now.

📥 Need a starting point?Download our Fiduciary Audit Checklist → (drops Wednesday)And stay in the know at www.herbonhealth.com