Beyers v. Caterpillar was docketed in the Northern District of Illinois on August 4, 2026 (No. 1:26-cv-09260) on behalf of more than 63,000 participants across two health plan options, the third suit this year built on the theory that one option cost more than an alternative at every enrollment tier and every level of medical spending (Thompson Hine, August 7, 2026). Not one of those 63,000 lives sits in a fiduciary liability rating base.
The policy that responds was priced off two decades of 401(k) excessive-fee experience. Marsh put U.S. financial and professional lines at +1% in the second quarter of 2026 (Marsh Global Insurance Market Index, July 23, 2026), and WTW's spring marketplace update called fiduciary and pension trust pricing flat. Filing frequency moved considerably faster than that.
The Standing Gate Cracked in Two Courtrooms
Through 2025 the health-plan fee wave looked contained because it kept failing at Article III. The District of New Jersey dismissed Lewandowski v. Johnson & Johnson on November 26, 2025 for lack of standing, holding that the "requested relief could result in lower contribution rates" but that "there is no guarantee that it would" (D.N.J., quoted by Thompson Hine, February 2026). Wells Fargo drew the same result on the same ground. Both dismissals were without prejudice, and the Lewandowski plaintiff noticed an appeal on January 16, 2026, now pending at the Third Circuit as No. 26-1107.
Then two rulings went the other way inside five weeks. Stern v. JPMorgan Chase (S.D.N.Y., No. 1:25-cv-2097) survived dismissal in March 2026 on allegations that the plan let CVS Caremark charge inflated drug prices, with the court finding higher out-of-pocket costs a sufficient injury at the pleading stage and expressly departing from the Johnson & Johnson and Wells Fargo reasoning (Frier Levitt, March 11, 2026). On April 2, 2026 the Northern District of Illinois denied the motion to dismiss in Barbich v. Northwestern University (No. 1:25-cv-06849), holding that "alleging that they paid more for the benefits than they should have is an injury sufficient to confer standing."
Standing is the entire loss-cost switch on this exposure. A suit dismissed at the pleading stage is 100% allocated loss adjustment expense and zero indemnity. A suit that clears standing enters discovery, then class certification, which plaintiffs won in 95% of contested ERISA motions in 2025 (Duane Morris data, reported by Bloomberg Law, 2026). The same claim count therefore carries two severity distributions that differ by an order of magnitude, and which one applies currently depends on the district. Venue mix is not a rating variable in any fiduciary class plan on the market.
The Rated Exposure Base Does Not Contain the Health Plan
Fiduciary underwriting attaches its excessive-fee terms to retirement plan size. Virtually all insurers now mandate retentions running from $1 million to as much as $15 million for excessive fee or mass and class action claims, with the steepest applied to sponsors holding defined contribution assets above $500 million (Aon Financial Services Group, January 2024). The submission behind it is an excessive fee questionnaire built around the defined contribution plan, a control the market adopted after fiduciary rates rose 15% to 20% in the last repricing (Marsh McLennan Agency, February 2022).
Health plan exposure does not scale with DC assets. It scales with covered lives and annual plan spend, and those are concentrated exactly where the questionnaire does not look. KFF's 2025 employer survey puts 67% of covered workers in self-funded plans, and 80% at larger firms (KFF Employer Health Benefits Survey, 2025). An industrial employer with a mature but unremarkable 401(k) and a self-funded medical plan covering 63,000 lives is presently underwritten as a mid-sized fiduciary risk and rated off the smaller of its two exposures.
That is a class plan and exposure base problem, not a trend factor problem. Loading a frequency selection to reflect the Q1 2026 filing count spreads the charge evenly across a book whose real health-plan exposure is wildly dispersed. The accounts that will produce the claims are identifiable today from covered lives, self-funded status, and PBM contract structure, and none of those three reach the current rating algorithm.
Severity Anchors Arrived Before Any Verdict Did
The retirement plan wave gave underwriters no forward severity signal for years; pricing ran off settlements, of which more than 130 have resolved at $1 million or above and at least 55 at $10 million or above (Aon, January 2024). The health plan complaints arrive with their damages arithmetic already on the face of the pleading, because the Consolidated Appropriations Act of 2021 requires brokers and consultants receiving $1,000 or more to disclose their compensation to the plan. Plaintiffs do not need discovery to build the number. The disclosure regime hands it to them.
| Case and court | Alleged commissions | Share of premium | Comparator in complaint |
|---|---|---|---|
| Braham v. Labcorp and Willis Towers Watson (N.D. Ill., 1:25-cv-15583) | Over $14M across six years | 28.89% average | Home Depot at 5% or less |
| Fellows v. Universal Services of America, Mercer Health and Lockton (S.D.N.Y., 1:25-cv-10659) | Over $23M across six years | 39.80% average | Broadcom at 2.6% |
Source: Frier Levitt, on the voluntary benefit program complaints filed in late 2025.
Both complaints then borrow a health actuarial metric to size the harm, citing medical loss ratio standards of 85% for government programs and 60% to 80% elsewhere to argue that the voluntary accident, critical illness, and hospital indemnity programs ran below a 50% MLR once broker compensation was stripped out. On the pharmacy side the same move produced the Johnson & Johnson allegation that the plan paid $10,239.69 for a teriflunomide prescription available at retail for $28.40 to $77.41 (complaint, via Groom Law Group). A fiduciary underwriter can now compute a plausible demand from an account's own broker disclosure at submission, which is a capability this line has never had.
Defense Within Limits, and Why Flat Rate Is the Wrong Read
Johnson & Johnson has won twice and is still funding an appeal into a third calendar year. Fiduciary policies are defense-within-limits, so the tower erodes on the wins. A move from fewer than 40 proposed class actions in Q1 2025 to roughly 70 in Q1 2026 (Bloomberg Law, 2026) raises expected ALAE across the book whether or not a single health-plan case ever reaches settlement, and the retirement-plan analogue suggests where the dismissal rate eventually lands: defendants have historically prevailed on only 20% to 25% of motions to dismiss in excessive fee cases (Aon, January 2024).
The market's last response to a frequency shock of this shape was priced. Marsh McLennan Agency documented fiduciary rate increases of 15% to 20% against an 80% rise in ERISA litigation. Filings have now roughly doubled year over year and the composite is up 1%. Marsh's own commentary on the quarter describes carriers moving the other way: "In many markets, in addition to competing based on price, insurers are seeking to differentiate themselves through broader coverage, expanded policy terms, and lower deductibles" (John Donnelly, President, Global Placement, Marsh Risk, July 23, 2026). Broader terms and lower deductibles are the precise mechanism by which a book absorbs a new exposure without ever booking rate for it, and it mirrors the terms-first repricing the market ran when AI exclusions moved from general liability into D&O and fiduciary forms.
Correlated Exposure With the Stop-Loss Book
The alleged breach in the PBM cases is the pharmacy cost itself: spread pricing, rebate retention, and specialty drug spend the plan failed to negotiate down. That is the same cost driver sitting inside the stop-loss loss ratio for the same employer. A carrier writing both products on one account holds two exposures responding to one underlying trend, and the correlation runs deeper into the small-account segment than it first appears, since KFF puts 37% of covered workers at firms with 10 to 199 employees in level-funded plans, which pair a small self-funded component with stop-loss.
An adverse pharmacy year raises the stop-loss attachment breach rate and simultaneously strengthens the factual record a plaintiff needs to plead imprudent PBM oversight. Neither reserving process currently treats the other as a correlated segment. Anyone modeling accumulation across benefit lines should be reading the pharmacy trend decomposition and the fiduciary frequency selection off the same account list.
What Moves in the Next Renewal
Four concrete changes for a fiduciary or management liability desk working the fourth quarter:
- Split the frequency assumption. Retirement-plan fee suits and health-plan suits are distinct loss processes riding one policy form, and blending them into a single trend selection buries the faster-growing one.
- Add covered lives, self-funded status, and PBM contract type to the submission. Ask for the CAA 2021 broker and consultant compensation disclosure at underwriting; it is the identical document the Labcorp and Universal Services complaints were built from.
- Read the excessive-fee retention wording literally. Most were drafted around defined contribution plan assets. Confirm with the carrier whether that retention attaches to a health-plan fee claim at all, because a $1 million retention that bites only on DC claims leaves the primary layer fully exposed to the newer wave.
- Price venue. The surviving complaints sit in the Northern District of Illinois and the Southern District of New York; the standing dismissals sit in New Jersey and Minnesota.
Three prints will settle the direction. The Third Circuit's ruling in Lewandowski (No. 26-1107) is the binary: a reversal on standing revives the largest block of dismissed health-plan cases at once and converts a defense-cost exposure into an indemnity one. Caterpillar's response in the Northern District of Illinois, due this autumn, tests whether the financial dominance theory travels beyond the courtroom that first accepted it. And the next quarterly ERISA filing count is the frequency read that either confirms the Q1 step change or marks it as a filing-season artifact. A desk that waits for all three before touching its exposure base will be quoting 2027 business on a class plan calibrated to the 401(k) era.
Further Reading
- AI Exclusions Move From GL Into D&O and Fiduciary Liability – The same terms-and-conditions repricing mechanism, applied to a different emerging exposure on the same policy forms.
- D&O's 54.5 Loss Ratio Sits on a Premium Base That Shrank by a Third – How a comfortable-looking management liability ratio can hide inadequate reserves on the newest accident years.
- $4.5M Gene Therapy Claims Force Stop-Loss Pricing Overhaul – The other half of the clash: what catastrophic medical spend is doing to the stop-loss book on the same employer accounts.
- 2026 MMI Flags 14.8% Pharmacy Trend as Health Costs Hit $37,824 – The drug-cost drivers these complaints reframe as a fiduciary breach.
- DC Plan In-Plan Annuities: Why 90% Sponsor Support Has Not Produced Adoption – Fiduciary risk aversion shaping product decisions on the retirement side of the same policy.