Northwestern Lawsuit Tests ERISA Fiduciary Duties for Health Plan Choices
In late June 2025, a lawsuit was filed by employees against Northwestern University (Barbich et al. v. Northwestern University et al., No. 1:25-cv-06849 (N.D. Ill.) alleging that the Employer has breached their fiduciary duties under ERISA relating to its self-insured health plan.
On April 2, 2026, the Court denied Northwestern University’s motion to dismiss and required it to answer the complaint, making this an important case to follow.
This case brings to the forefront the question of whether existing fiduciary duties apply to plan design choices. Specifically, whether there is a fiduciary duty in the Health and Welfare Benefit context when administering a selected health care option, that could be considered an imprudent option. The plaintiffs argue that in this case the imprudent health care plan option was one that was more costly than the other health care plan options (higher premiums paid by the (employee) but did not provide any additional financial or medical benefits when compared to the other options provided. Specifically, the plaintiffs argue that this fiduciary duty was breached in the prudent selection and monitoring of the health plan options and in failing to disclose material information to participants.
To determine whether the fiduciary standard of conduct should be applied, the case calls into question whether the selection of various health care plans offered to participants is a business decision outside the scope of the Plan Administrator’s fiduciary duties. And further, it focuses on whether the scope of the Plan Administrator’s fiduciary duties include reviewing, monitoring, and disclosing any lack of financial or medical benefit to participants of the health care plan option in question versus the other options available.
The legal questions presented in this case could potentially extend the fiduciary functions of Health and Welfare Benefits to mirror the stricter and more extensive fiduciary functions of Retirement Plan Benefits under ERISA – which is important to note, have been established through the court systems.
ERISAPros will be monitoring the progress of the lawsuit and considering whether any adjustments should be made to employers’ risk management strategies, especially as they relate to Health and Welfare Benefits plan documents.
