Court Rejects Testimony of Plaintiffs' Prudence Experts in 401(k) Litigation Bench Trial

On August 12, 2025, the district court in McDonald v. Laboratory Corporation of America Holdings, No. 1:22-cv-00680 (M.D.N.C.), entered judgment in favor of the defendant (LabCorp) following a four-day bench trial focused on LabCorp's management of its 401(k) plan (the Plan). The class action lawsuit alleged that LabCorp breached ERISA's duty of prudence by:

1. "fail[ing] to monitor or control the excessive compensation paid for recordkeeping services"
2. "select[ing] and retain[ing] investment options in the Plan despite the high cost of the funds"
3. "fail[ing] to investigate the availability of lower-cost share classes of certain mutual funds" 

In ruling in favor of LabCorp, the court found that the "[p]laintiffs failed to meet their burden to establish that LabCorp breached its fiduciary duty of prudence and further [found] that LabCorp engaged in a prudent process in managing its recordkeeping fees and monitoring the Plan's investment shares."

The court's decision was based largely on its Daubert analysis of the parties' experts and the probative value it gave their testimony. The court determined that the testimony of both of the plaintiffs' witnesses — one a purported fiduciary expert and the other a purported recordkeeping and plan administrative services expert — should only be given "limited weight in the resolution of this dispute." These experts testified regarding the reasonableness of the Plan's recordkeeping fees, share classes, and monitoring of recordkeeping fees. In its analysis of the testimony of the plaintiffs' experts, the court noted several areas of concern, concludng that one expert's conclusions were largely based on personal experience, not industry practices, and relied on "approximations, generalities, and personal examples" instead of "demonstrable data." The court also pointed out the other expert's lack of familiarity with documents he claimed to rely on in forming his expert opinions.

As to LabCorp's expert — a fiduciary methods and process expert — the court found his testimony (and the process of reaching his conclusions) to be "a solid, admissible expert opinion" and "probative for the facts at issue in the present case." LabCorp's expert opined that it had a "reasonable and appropriate process for monitoring recordkeeping fees that was consistent with industry standards." While, like the plaintiffs' experts, LabCorp's expert relied in part on his personal experience, he also "collected independent data to analyze the reasonableness of the recordkeeping fees." The court found this process a sufficient basis to form an expert opinion.

The court held that, based on the evidence presented at trial, the plaintiffs failed to establish that the defendant breached its fiduciary responsibilities or caused any losses to the Plan. This decision is a good example of the key role expert testimony plays in proving and defending ERISA prudence claims and highlights the factors that are important to courts when performing their Daubert analyses.

More District Courts Find No Private Right of Action Under No Surprises Act

Two more federal district courts have ruled that healthcare providers do not have a private right of action to sue to enforce No Surprises Act (NSA) Independent Dispute Resolution (IDR) arbitrations awards.

The U.S. District Court for the Middle District of Florida followed the Fifth Circuit's lead in rejecting an air ambulance provider's federal court petition to confirm and enforce NSA arbitration awards totaling $1,1,26,906.61. Worldwide Aircraft Services Inc, d/b/a Jet ICU v. Worldwide Insurance Services, LLC d/b/a GeoBlue, No. 8:25-cv-167-MSS-NHA (M.D. Fla. Aug. 12, 2025). Respondent GeoBlue moved to dismiss the petition or, alternatively, to vacate the arbitration awards, arguing the NSA does not create a private right of action for the confirmation of NSA IDR awards in federal court. GeoBlue also argued it was not an insurer, therefore the IDR arbitrator exceeded its authority when applying the NSA against it. 

In granting the motion to dismiss, the court stated that "the No Surprises Act does not authorize this Court to confirm or enforce the IDR awards," citing to the Fifth Circuit's recent decision in Guardian Flight, L.L.C. v. Health Care Serv. Corp., 140 F.4th 271, 275 (5th Cir. 2025). According to the court, "the NSA bars 'judicial review' of determinations by certified IDR entities except in certain cases where a party requests vacatur." The court explained: 

Instead, Congress empowered the Department of Health and Human Services to assess penalties against insurers for the failure to comply with the No Surprises Act. Congress withheld this Court's jurisdiction to confirm or enforce IDR awards. 

Because the court found it lacked the statutory authority to grant the relief requested, it dismissed the action for lack of subject matter jurisdiction. 

On August 14, 2025, the U.S. District Court for the Southern District of New York likewise held that a group of plastic surgeons could not move forward on their claim against Cigna Health and Life Insurance Company and the Connecticut General Life Insurance Company (collectively, Cigna) to enforce $3 million in IDR awards related to post-mastectomy breast reconstruction surgeries. East Coast Advanced Plastic Surgery, LLC v. Cigna Health and Life Ins. Co., Nos. 25-cv-00255, 25-cv-01686 (S.D.N.Y). This claim was one of several in dueling lawsuits between Cigna and East Coast Advanced Plastic Surgery, LLC (ECAPS). The first, initially filed by Cigna, alleged ECAPS engaged in fraudulent and improper billing practices, including fee forgiving, whereby the provider allegedly did not collect the deductible or co-insurance from participants or failed to balance bill them, and unbundling of services, whereby the provider allegedly billed separately for services that should be covered in a single global billing code, thereby increasing the amount of payment on participant claims. Cigna asserted claims under ERISA and state law, seeking to recover $8.5 million in provider payments. ECAPS countersued under the NSA and state law, alleging that Cigna failed to pay claims in accordance with the terms of a contract ECAPS entered into with Multiplan to provide out-of-network services to Multiplan clients, including Cigna-administered plans, and that Cigna violated the NSA in failing to pay the IDR awards. 

The court rejected ECAPS's claim that Cigna lacked standing to sue for equitable relief to recover the funds allegedly improperly paid to ECAPS and held that Cigna, an ERISA fiduciary, plausibly stated an ERISA claim to recover the amounts at issue. The court also denied dismissal on Cigna's fraud, negligent misrepresentation, and unjust enrichment claims. 

As to ECAPS's NSA claims seeking to enforce the IDR awards against Cigna and a declaration that Cigna violated the NSA, the court found the claims "unavailing." The court stated that ECAPS's request to enforce the IDR award overlooks the NSA statutory text stating that an IDR award is "binding on the parties involved" and "shall not be subject to judicial review[,]" except under the express statutory exceptions incorporated into the NSA form the Federal Arbitration Act (FAA). The court also emphasized that all but one court to consider the question have held "there is no private right of action under the NSA to enforce IDR awards." The court declined to recognize an implied right of action, stating such right is unavailable when Congress has provided an alternative method of enforcement, which it noted Congress did with the NSA by making the Department of Health and Human Services (HHS) responsible for oversight and enforcement of IDR awards.  

If Jet ICU and ECAPS appeal, it will give the Second and Eleventh Circuits a chance to weigh in on the defects in these provider lawsuits seeking to enforce NSA IDR awards through the federal courts. Providers and payors alike will be watching whether any such review creates a circuit split with the increasingly influential Fifth Circuit decision in Guardian Flight. 

Tri-Agencies Issue Statement on Short Term Limited Duration Insurance 

On August 7, 2025, the Departments of Labor (DOL), HHS, and the Treasury (collectively, the Departments) issued a statement regarding short-term limited-duration insurance (STLDI), which was the subject of final tri-agency rules issued in April 2024 (2024 Final Rules). The 2024 Final Rules amended the definition of STLDI for purposes of its exclusion as an excepted benefit under the Public Health Services (PHS) Act, ERISA, and the Internal Revenue Code. Whereas prior to the 2024 Final Rules, STLDI policies could be issued with a term of up to 12 months and were subject to renewal up to 36 months, the 2024 regulatory amendments set a limit of three months for an initial STLDI policy, which could be extended only one month for a total policy duration of four months within a 12-month period. The August 7 statement indicates the Departments intend to undertake notice and comment rulemaking to consider the need for further amendments to the definition of STLDI. The statement also advises that "the Departments do not intend to prioritize enforcement actions for violations related to failing to meet the definition of [STLDI] in the 2024 final rules," including with respect to the enhanced consumer notice provision in those rules. 

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