Yes — employee-paid supplemental insurance is now facing ERISA class-action risk. ERISA, the federal law that sets standards for employee benefit plans, is being used to challenge accident, critical-illness, cancer and hospital-indemnity coverage offered at work.
Holland & Knight reports that four nearly identical cases filed Dec. 23, 2025 targeted United Airlines, LabCorp, Community Health Systems and Allied Universal over that type of coverage in its Holland & Knight analysis. The suits argue these voluntary products function as ERISA welfare plans with fiduciary duties.
Table of Contents
- Why voluntary coverage loses its exemption
- What the suits claim about premiums and fees
- Why brokers and consultants are named
- What to do if you pay for this coverage
Why voluntary coverage loses its exemption
Federal rules can exclude group insurance from ERISA only when workers pay all premiums, join voluntarily, the employer does not endorse the plan, and the employer gets no payment for it. That test comes from the Labor Department regulation in its federal safe-harbor text.
Plaintiffs say common employer steps cross that line. They point to choosing carriers, negotiating terms, collecting premiums through payroll deduction, and promoting plans in benefits materials. If a court agrees that conduct counts as endorsement or maintenance, the plan becomes subject to ERISA prudence and loyalty duties.
What the suits claim about premiums and fees
The complaints focus on money flow, not medical denials. They allege fiduciaries failed to monitor premiums, review insurer loss ratios, control broker commissions, and keep plan expenses reasonable. A later case shows the scale of those claims. Munson v.
Macy's, filed in Oct. 2026, covers accident, critical-illness and hospital-indemnity coverage from 2019-2024 and alleges $36.1M in premiums with about $13.2M, or 36.7%, paid to Aon-affiliated brokers, according to Insurance Business reporting. Workers do not need to judge loss ratios themselves. The key question is whether the employer shopped the market, disclosed pay to middlemen, and documented why costs were fair.
Why brokers and consultants are named
The early suits also name benefits brokers and consultants, including Mercer and Willis Towers Watson. Plaintiffs describe them as functional fiduciaries that steered carrier selection to earn commissions. That theory invokes prohibited transactions and self-dealing.
It treats commission-driven advice as a loyalty breach, not just expensive help. Employers face related scrutiny over bidding and oversight. Counsel are now urging audits of endorsement signs, broker pay, loss ratios, competitive bids, and fee disclosures.
What to do if you pay for this coverage
These cases remain early and allege wrongdoing rather than proving any plan violated ERISA, as noted by Verrill in its Verrill litigation update. No court has yet ruled that these voluntary plans are ERISA plans or that the commissions were excessive.
Still, enrollment leaves a paper trail worth keeping. Save these items while employed: Watch the employer name on your coverage and check settlement notices for that employer, date range, and plan type before filing a claim.
- benefits guides and enrollment screens describing accident, critical-illness, cancer or hospital-indemnity coverage
- pay stubs showing per-paycheck premium deductions
- insurer notices about premiums, rate changes, or claims paid
- emails or portals naming the broker, carrier, or plan administrator