Northwestern University Faces Potential ERISA Class Claims Regarding its Welfare Plan

On June 20, 2025, a new class action complaint raising novel fiduciary claims was filed against Northwestern University and its Executive Director of Benefits & Work/Life Resources and delegated fiduciaries (Does 1-20) (collectively, Northwestern) in the U.S. District Court for the Northern District of Illinois. Barbich & Lindvall v. Northwestern University, et al., No. 25-cv-6849 (N.D. Ill.). Class representatives are former participants in the Northwestern University Employee Welfare Plan (Plan). The putative class alleges that the defendants breached their ERISA fiduciary duties with respect to the Plan by "(1) failing to prudently select and monitor the Plan's preferred provider organization ('PPO') medical insurance options, allowing the low-deductible option to be financially dominated by the high-deductible option; and (2) failing to disclose this material information to the Plan's participants." The plaintiffs claim that the defendants' "actions and omissions have caused millions of dollars in losses to the proposed class." More specifically, the plaintiffs point to the Plan and its participants allegedly "paying wholly excessive and unnecessary healthcare expenses in the form of lost wages due to excessive premiums unaccompanied by any reduced out-of-pocket expenses." The complaint brings breach of fiduciary duty claims for imprudence, disloyalty, and a failure to monitor under ERISA, 29 U.S.C. § 1132(a)(2) and (3). 

The plaintiff class sets forth a novel ERISA claim rooted in the economic theory that Northwestern's high-deductible health plan "financially dominated" its low-deductible option. The complaint explains that "[a] health insurance option is financially dominated when there is another option that results in lower total out-of-pocket expenses to participants, inclusive of premiums and regardless of the amount of medical care received. In essence, the dominated option costs more but provides no additional benefit." The complaint alleges that the defendants "have assembled PPO options in which the low-deductible option is financially dominated by the higher-deductible options, in breach of their fiduciary duty of prudence." The complaint also states that "[d]efendants are aware of the dominated nature of the low-deductible option but have failed to communicate this material information to the Plan's participants, in breach of their fiduciary duty." The complaint asserts that "after consulting with the Plan's actuaries, Northwestern University's benefits department has admitted that it is unlikely that there is a scenario where a participant would be financially better off with the [low-deductible] option." Interestingly, the complaint points out that "[t]hese results are further emphasized when considering the presence of health savings accounts for those within the [high-deductible plan]" given that Northwestern University "makes a dollar-for-dollar matching contribution of up to $1,000 annually." 

Of note, the complaint cites to Hughes v. Nw. Univ., 142 S. Ct. 737, 742 (2022) (Hughes I) and Hughes v. Nw. Univ., 63 F.4th 615, 629-30 (7th Cir. 2023) (Hughes II) involving ERISA claims related to the university's retirement plan for the idea that "[i]t is no defense to the imprudence of some benefit options that others may have been prudent; a meaningful mix and range of options does not insulate plan fiduciaries from liability of breach of fiduciary duty."

If this complaint moves beyond the motion to dismiss stage, including any challenges to Article III standing, it may give rise to a new area of ERISA class action litigation involving health and welfare plans. 

New Set of Bills Introduced in Congress Focused on Portable Health and Retirement Benefits for Independent Contractors and Association Health Plans

On July 7, 2025, Senators Bill Cassidy (R-LA), Tim Scott (R-SC), and Rand Paul (R-KY) introduced a legislative package including the Unlocking Benefits for Independent Workers Act, the Modern Worker Empowerment Act, the Association Health Plans Act, and the Independent Retirement Fairness Act. 

Senator Cassidy explained the impetus behind the Unlocking Benefits for Independent Workers Act: "Outdated labor laws should not prevent workers from receiving health care or saving for a secure retirement." The bill aims to accomplish this goal by stating that the providing of any benefit or protection commonly provided to full-time employees, to include retirement and healthcare benefits and portable accounts, shall not be used to determine the independent contractor's employment status under federal law.  

The Association Health Plans Act would amend ERISA to clarify that certain groups or associations of employers and self-employed individuals can be classified as employers. The bill states that "all of the employees (including self-employed individuals) employed by all of the employer members (including self-employed individuals) of a group or association of employers shall be (i) treated as participants in a single plan multiple employer welfare arrangement; and (ii) aggregated and counted together for purposes of any regulation of an employee welfare benefit plan established and maintained by such group or association." The bill also states that any employee welfare benefit plan established by this bill is prohibited from discriminating based on health status-related factors when establishing any rules for eligibility to enroll for benefits, requiring an individual to pay a premium or contribution that is greater than the premium or contribution for a similarly situated individual enrolled in the plan based on any health status-related factor, and denying coverage on the basis of a pre-existing condition. 

The Independent Retirement Fairness Act would allow independent contractors to participate in pooled retirement plans without transforming the contractor into a full-time employee under relevant law. The bill also sets forth "pilot programs for the gig economy," instructing the Secretaries of the Treasury and Labor to "establish pilot programs to encourage independent workers to save for retirement." This bill was introduced in the wake of the Department of Labor (DOL) stating that it will no longer enforce a Biden-era rule relating to misclassification of independent contractors for the purposes of minimum wage and overtime under the Fair Labor Standards Act. 

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.