On April 2, 2026, in Barbich et al v. Northwestern University et al, an Illinois district court found that the plaintiffs sufficiently alleged that defendant Northwestern University (Northwestern) breached its ERISA fiduciary duties by mismanaging their group health plan benefits. The court denied the defendants’ motion to dismiss and ordered Northwestern to formally answer the complaint. Employers should be aware of this development, which marks a departure from rulings in several other recent group health plan fiduciary breach cases.
Background
As explained in our prior article on the initial case filing, the plaintiffs are current and former employees of the defendant. The plaintiffs alleged that Northwestern breached its ERISA fiduciary duties to their self-insured group health plan by failing to: 1) prudently select and monitor the plan’s preferred provider organization (PPO) insurance options and 2) disclose this material information to participants, causing injury in the form of financial loss from plan overpayments.
Under the PPO plan, Northwestern offered employees three different tiers: 1) Premier, the low-deductible option; 2) Select, the mid-deductible option; and 3) Value, the high-deductible option. The overpayments allegedly arose from the Premier PPO option having a higher premium while not providing proportionate benefits as compared to the Value PPO option.
Northwestern moved to dismiss for lack of standing and failure to state a claim, asserting that they were not acting as a fiduciary when selecting plan options and setting participant premium rates.
The Court’s Ruling
Standing
First, the court considered whether the plaintiffs had standing (i.e., suffered a concrete injury that a court can remedy) to pursue their claims. Northwestern argued there was no injury because participants received the health benefits promised, relying on the U.S. Supreme Court decision in Thole v. U.S. Bank N.A.
The court disagreed, holding the alleged injury was financial since the plaintiffs claimed they overpaid for coverage through payroll deductions (and corresponding lost wages). The court distinguished Thole because those plaintiffs did not allege an out-of-pocket loss and continued receiving vested pension benefits.
Fiduciary v. Settlor Acts
Next, the court reviewed whether Northwestern acted as an ERISA fiduciary in setting participant contributions and offering the PPO options. Northwestern argued these were plan design (settlor/business) decisions, not fiduciary acts. The plaintiffs countered that the plan document gave the plan administrator discretion over contribution amounts, and that implementing plan choices is a fiduciary function.
Because the settlor-versus-fiduciary question is fact-specific, the court declined to decide it at the motion-to-dismiss stage and held the complaint adequately alleged fiduciary conduct.
Fiduciary Breach Claims
Finally, the court evaluated whether the complaint plausibly alleged two fiduciary breaches (Count I: prudence/loyalty; Count II: disclosure) and concluded both claims could proceed.
For Count I, plaintiffs alleged Northwestern acted imprudently and disloyally by offering the Premier PPO at a higher employee cost without proportionate additional value compared to other options. Although Northwestern challenged the plaintiffs’ pricing/value comparisons, the court treated these arguments as factual disputes not suitable for resolution at the motion-to-dismiss stage of litigation. The court also rejected Northwestern’s argument that participants could not pursue relief for alleged losses to the plan. The motion to dismiss Count I was denied.
For Count II, plaintiffs alleged Northwestern failed to disclose material information – specifically, that the Premier PPO was allegedly “dominated” by other options – and that this omission was misleading (more than mere negligence). They also cited the defendant’s internal assessment (after consulting actuaries) that it was “unlikely” participants would be financially better off in the Premier PPO given employee contributions relative to the out-of-pocket maximum. The court found these allegations sufficient and denied the motion to dismiss Count II.
Employer Takeaway
This case is at an early stage (the court ruled only that the plaintiffs’ claims are sufficient to proceed past a motion to dismiss) so it’s too early to draw any conclusions. Still, the case is worth monitoring because it reflects a willingness (at least by this court) to allow for scrutiny of group health plan pricing/option decisions, potentially under ERISA fiduciary standards.
In the meantime, employers that sponsor ERISA-covered health plans should consider whether additional steps are needed to delineate and document when they are acting in a settlor capacity (plan design/business decisions) versus a fiduciary capacity (plan administration and communications). This may include clarifying who has fiduciary discretion under plan documents, maintaining records supporting contribution-setting and option-related decisions, and confirming that those processes align with the plan’s governing terms.
The decision also underscores the importance of ensuring that plan materials – including descriptions of benefit options and packages – are presented in a clear, accurate, and comparable manner so employees can evaluate tradeoffs (e.g., premiums, deductibles, out-of-pocket maximums, and other key features) and make informed, cost-conscious benefit elections.
We will continue to monitor developments in this litigation and related ERISA group health plan fiduciary-duty cases and provide updates as they become available.
Read the court’s complete order in Barbich et al v. Northwestern University.