PLANSPONSOR Roadmap: Health Benefit Fiduciary Duties—CAA Deep Dive

As health benefit plan sponsors work to understand their fiduciary obligations under the Consolidated Appropriations Act of 2021 and refine their processes to meet them, fiduciary frameworks developed for retirement plans can serve as valuable models, according to speakers from the first session of the 2026 PLANSPONSOR Roadmap: Health Benefit Fiduciary Duties livestream series.

The CAA has triggered litigation, underscoring the importance of diligent oversight. Experts speaking at the April 8 session shared that plan sponsors must pay close attention both to any fees they are paying to providers or consultants, and to their contracts with pharmacy benefit managers and other vendors.

Fiduciary Responsibilities

Jamie Greenleaf, a fiduciary consultant and co-founder of compliance platform Fiduciary In A Box, said the most significant CAA development over the past 12 months is that the Consolidated Appropriations Act of 2026 expanded to any covered health service provider expecting to earn at least $1,000 from providing a service to a benefit plan governed by the Employee Retirement Income Security Act to disclose its compensation to the plan sponsor. The law is intended to ensure health plan fiduciaries receive transparency in pricing.

The CAA of 2021 had added disclosure requirements under ERISA Section 408(b)(2)(B) for brokers and consultants, specifically, while the CAA of 2026 expanded the definition to “any covered service provider,” Greenleaf explained.

“ERISA steps in and says [to employers], ‘you need to be prudent fiduciaries and prudent stewards of those dollars you are withholding from your employee’s paycheck,’” Greenleaf said. “[The] CAA stepped that up and said, ‘we’ll provide you with info so you can be prudent stewards.’”

The first thing health plan sponsors should acknowledge is that they are the only fiduciary sitting at the table, Greenleaf said. Under Section 408(b)(2)(B), plan sponsors can receive the information they need to evaluate the reasonableness of fees for the services received and, therefore, carry out their fiduciary duties.

“Payment integrity starts with negotiating contracts and a [request for proposal],” said Julie Selesnick, senior counsel at Berger Montague and founder of Health Plan Legal Counsel. “Set up contracts so that you have data access and that the vendors you select for oversight have access. Be prudent, monitor vendors you select and pay only reasonable fees and costs for the exclusive benefit of plans and participants.”

Greenleaf said having an “unbiased payment integrity review” on an ongoing basis is another way plan sponsors can determine whether they are receiving the services for which the plan is paying. If a plan sponsor spots an error, it is good practice to document any steps they took to remedy it, showing that, as fiduciaries, they took all the steps they could to ensure the vendors are operating in the best interest of plan participants.

“You can never delegate away vendor selection or vendor monitoring,” Selesnick said.

On the Litigation Front

Recent health plan litigation has raised questions about pleading standards and new CAA disclosure requirements, according to Selesnick.

According to the pleading standard established in the Supreme Court’s 2025 Cunningham v. Cornell ruling, plaintiffs can survive a motion to dismiss by alleging a “prohibited transaction” under ERISA occurred, Selesnick explained. She said service providers are much more likely to face a prohibited transaction claim than a breach of fiduciary duty claim.

A health plan fiduciary duty claim was also upheld earlier this month when a federal judge denied Northwestern University’s motion to dismiss a proposed class action lawsuit accusing the school of mismanaging employee health plan options, potentially charting course for breaches of fiduciary duty to survive dismissal, as well.

The lawsuit claimed Northwestern violated its fiduciary duty as a plan sponsor under ERISA. According to the complaint, the university offered multiple preferred provider organization health plans but failed to properly evaluate and disclose that one option—the higher-premium “Premier PPO”—provided no meaningful advantage over cheaper alternatives.

U.S. District Judge Jeremy Daniel, presiding in U.S. District Court for the Northern District of Illinois, ruled that the plaintiffs in Barbich et al. v. Northwestern University et al.— current and former Northwestern employees—had sufficiently alleged that they overpaid for health insurance benefits due to the university’s handling of its plan.

On the PBM disclosure front, the Department of Labor’s proposed rule to clarify how ERISA disclosure obligations apply to PBMs under the CAA of 2021 would add more in-depth reporting requirements on plans with more than 100 employees, according to Selesnick. In addition, the proposed rule requires that actual compensation numbers are required to be reported, rather than formulas.

April 15 is the deadline for public comment on the proposed rule.

While what qualifies as an “unreasonable” fee is not fully defined, regulatory bodies have started to arrive at a commonly accepted definition, Selesnick said. The CAA of 2026 mandates a 100% pass-through of rebates for group health plans with plan years beginning on or after August 3, 2028—30 months after the enactment of the legislation. A transaction can also be “patently unreasonable” if it is not disclosed under 408(b)(2)(B).