This post was originally published on this site
The era of delegating benefits oversight to vendors and assuming fiduciary protection is limited, according to a recent report from Mercer. A perfect storm of Supreme Court decisions, aggressive litigation and emerging technologies is exposing HR executives to unprecedented legal liability, even for decisions made by their outsourced partners.
“ERISA fiduciaries who violate their duties may be subject to investigation and personally liable for any profits obtained or losses incurred through the use of plan assets,” warns Mercer’s latest compliance analysis, which tracks the regulatory and litigation landscape for employer health plans.
Supreme Court lowers the bar for plaintiffs
Legal exposure is growing for employers. In April 2025, the U.S. Supreme Court unanimously ruled in Cunningham v. Cornell University in a way that “will likely make it more difficult for fiduciaries in these cases to defeat a prohibited transaction allegation on a motion to dismiss,” as noted in Mercer’s analysis.
The decision, according to Mercer, “sets a low bar for what plaintiffs must plead in these cases to avoid dismissal and proceed to the costly discovery phase of litigation.” This may indicate that more benefit-related cases will survive early dismissal motions, forcing employers into expensive discovery and increasing settlement pressure.
