Benefits brokers serving self-funded health plans may be operating as de facto fiduciaries without realizing it and plaintiff attorneys are taking notice.
Ron Peck is chief legal officer of The Phia Group, a healthcare cost containment company headquartered in Canton, Massachusetts. He spoke with Insurance Business Benefits US to explain what brokers need to know and why the word "fiduciary" should not be feared.
The 2026 Phia Group Broker Survey Results & Analysis surveyed 124 benefits brokers and advisors and found that only 12% are very confident their clients have adequate fiduciary processes in place, but that responsibility may lie with the brokers themselves.
Peck explained how the self-funded health benefit plan landscape has evolved over time, resulting in cases where benefits brokers take on fiduciary responsibility.
"When you look at a self-funded health benefit plan, which is where all of this fiduciary liability is really at its breaking point, traditionally and we're talking decades ago, self-funded health benefit plans were large employers," Peck explained. "They had enough people, beneficiaries, plan enrollees, that they would contribute into the plan and you could spread the risk over this large pool of people."
Smaller employers, by contrast, preferred the simplicity of fully insured plans. Premium checks went to a carrier; claim decisions stayed with the carrier. When a denied claim landed on an HR desk, there was always someone else to point to.
Peck said that the dynamic shifted as premiums climbed. Over the past two decades - and especially the last ten years - small and mid-sized employers have migrated to self-funding in growing numbers as a way to contain costs. Their benefits brokers guided that transition, often stepping into decision-making roles their clients were unprepared or unwilling to fill.
"These small and medium-sized employers, they've never done this before," Peck said. "They're accustomed to just cutting a check, and the insurance carrier makes all the decisions. They still feel uncomfortable having that level of authority or decision-making. So the broker is kind of being forced into this position; the employer is calling the broker saying, what do I do about this claim? What do I do about this plan document? What do I do about this appeal?"
The legal turning point came not from the health side, but from the retirement and financial services world.
Following the 2008 financial crisis, plaintiff law firms, notably Schlichter Bogard, successfully sued financial brokers for Employee Retirement Income Security Act (ERISA) fiduciary breach, arguing that disclaimed fiduciary status does not override the exercise of discretionary control over plan assets. Courts agreed.
Those same firms are now applying that blueprint to health plan brokers.
"They used their fiduciary breach lawsuits against the retirement and financial brokers, and they took that blueprint and now they're applying it to these health plan brokers," Peck said. "Regardless of whether you view yourself as a fiduciary, or regardless of what your contract says, ultimately what the court looks at is: do you exercise any sort of authority or control over how the plan is created, how it's administered, how claims are processed?"
The targets in emerging health plan litigation include overpaid claims, self-dealing, lack of transparency, and failure to issue requests for proposals for vendors such as pharmacy benefit managers and subrogation providers.
"If you're not doing that, you're not prudently managing the plan. And if you're not prudently managing the plan, you're breaching your fiduciary duty," Peck said.
Most benefits brokers disclaim fiduciary status in writing. Peck's view is that this disclaimer offers little protection when a broker's conduct tells a different story.
"Do they think that they're a fiduciary? Most would say no. Most would say they even disclaim it in writing. But are they functioning as a fiduciary? More likely than not, yes," he said. "It's one of those things where if you function as one, a court will find you to be one regardless of what you disclaim."
He added that fiduciary liability does not transfer cleanly from one party to another - it behaves, in his words, more like a contagion. "Just because I have it, if I give it to you, that doesn't mean I don't have it anymore. Now we just both have it. The fiduciary liability really is like a pandemic."
That point matters for brokers who believe they can structure their way out of responsibility. A plan sponsor who delegates decisions to a broker does not thereby shed their own liability; both become co-fiduciaries.
Peck outlined two primary options for brokers navigating fiduciary exposure.
The first is to fully embrace fiduciary status: act in the client's best interest, document all decision-making rigorously, and position that posture as a competitive differentiator. He pointed to how financial advisory firms, after the dust settled from ERISA retirement litigation, turned fiduciary status into a marketing asset.
"There's at least one major financial advisory firm out there, household name, where the commercial is basically: 'We're a fiduciary. We always put our clients' interests first.' Not only are they doing it, they're marketing it."
The second option is to remain a non-discretionary advisor - presenting options, educating the plan sponsor - while requiring the employer to formally appoint a third-party plan administrator who holds final discretionary authority.
"Which of those two buckets you want to fall into really depends on the types of plans, plan sponsors, your clients," Peck said. "If you have a client who wants to be hands-off and doesn't want to make decisions, you're probably going to have to step into the shoes of a traditional insurance carrier who used to take on all the liability."
For brokers who do accept fiduciary responsibility, Peck described a third approach: assembling a team of specialist subcontractors, each willing to accept defined fiduciary liability for a distinct plan function. One expert stands behind the plan document. Another holds discretionary authority over claims processing. A third manages eligibility. A fourth handles appeals.
"It's almost like one of those superhero teams where the broker is Captain America, but he's got his team of Avengers with them, and each superhero has a role to play," he said. "Together, they can replace that traditional insurance carrier for that employer."
Critically, a broker or third party accepting fiduciary status can pair that role with indemnification — a warranty on their work. If the plan sponsor is sued for a fiduciary breach that resulted from following the broker's directive, the broker agrees to defend and protect the client against that claim.
Peck laid out a step-by-step framework for brokers assessing their own exposure.
Step one is to segment the full book of business into two groups: clients who want to retain fiduciary authority, and clients who want to delegate it. For the first group, confirm that intent in writing and ensure all recommendations are advisory - final approval stays with the employer.
For clients in the delegation group, the broker must decide whether to decline that role and direct the client to appoint a third-party plan administrator, or to formally accept the plan administrator role with all associated fiduciary obligations.
If acting as plan administrator, fiduciary obligations span the full plan lifecycle: drafting the plan document, processing claims, confirming eligibility, managing appeals, selecting vendors, and choosing stop-loss coverage. Each decision requires documentation.
Peck used stop-loss carrier selection as a concrete illustration. "We sent out an RFP, they provided the most robust coverage for the lowest premium. We were able to get them to mirror the plan document where there are no gaps between their policy and our plan. If we exclude it, they exclude it. If we cover it, they cover it. And you're able to document that you did that investigation."
That paper trail, he argued, is what separates a defensible decision from a fiduciary breach allegation.
Peck's closing message was a reframe rather than a warning.
"The thing to fear is not fiduciary duty or fiduciary liability. The thing to fear is breaching fiduciary duties," he said. "Recognize that whether you think you're a fiduciary or not, they think you are - or should be. And once you accept that, and you adopt that philosophy, and you go the extra mile to prove that you're being prudent with plan assets, whether you are or aren't actually a fiduciary, it doesn't matter. You'll be safe."
He noted that the attributes of a good fiduciary - reasonable fees, transparency, putting the client's interests first, avoiding self-dealing - are qualities any service provider would claim to offer anyway.
"If someone asks you, are you going to charge reasonable fees, be transparent, put my interests ahead of your own, and avoid self-dealing? You're going to say, of course. So it's kind of funny. We're afraid of the word fiduciary, but as a service provider, it would be a little awkward to say that you don't do the things that make a good fiduciary."
