Are Indirect Compensation Structures a Concern for Healthcare Consultants?

Q: Is there a heightened risk of legal claims against healthcare consultants and brokers for claims arising out of indirect compensation?    

Jamie Greenleaf, co-founder, Fiduciary In A Box; Julie Selesnick, executive director, legal and compliance at Judi Group and founder of Health Plan Legal Counsel; and Jacob Mattinson, partner, McDermott Will & Schulte, answer below:

A: Yes—there is a heightened risk of legal claims against healthcare consultants and brokers arising from indirect compensation arrangements, particularly when compensation is undisclosed, poorly documented or inadequately monitored. The clearest signal is the recent wave of Employee Retirement Income Security Act lawsuits targeting voluntary benefits programs. Plaintiffs’ firms are applying “excessive fee” theories previously used in retirement plan litigation to health and welfare plans and to related broker compensation arrangements.

Multiple class actions filed in late 2025 have named both employers and major consulting or brokerage firms as defendants, alleging excessive commissions, prohibited transactions, fiduciary breaches and failures to monitor compensation. More recently, a fourth voluntary benefits case was filed against another employer and brokerage firm, continuing the coordinated litigation trend.

Litigation risk is not limited to direct commissions. Plaintiffs are increasingly scrutinizing indirect compensation structures, including embedded commissions, carrier-paid incentives, contingent compensation, marketing allowances, administrative subsidies and cross-subsidized consulting arrangements. The theory is straightforward: If compensation is paid to a consultant or broker in connection with a plan, plaintiffs will argue it must be disclosed, must be reasonable and must be prudently monitored.

The trend extends beyond voluntary benefits litigation. Similar allegations regarding broker and consultant compensation have already appeared in broader health plan fiduciary lawsuits against large employers, including Johnson & Johnson, Wells Fargo and JPMorganChase. In addition, the 2025 whistleblower action in Wiederhold v. Evolution Healthcare focused directly on alleged broker compensation and oversight failures involving an AssuredPartners subsidiary. Although later voluntarily dismissed, the case highlighted growing scrutiny of broker compensation transparency and fiduciary process.

The regulatory environment further increases litigation risk. The Consolidated Appropriations Act of 2021 imposed new disclosure obligations for both direct and indirect compensation received by certain brokers and consultants servicing group health plans. Scrutiny is expected to intensify further under the Department of Labor’s proposed rule on enhanced pharmacy benefit manager compensation disclosures and the CAA of 2026, which would expand reporting obligations relating to PBM-related compensation, rebates, spread pricing, network margins and affiliated entities.

The DOL proposed rule is particularly significant because many large brokerage and consulting firms now both advise employer plans on PBM selection and operate affiliated PBM coalitions or buying groups. In many arrangements, the broker or affiliate may hold the PBM contract itself while receiving compensation from multiple points within the drug supply chain. The proposed rule appears designed to include those arrangements by requiring substantially greater transparency into indirect compensation and rebate retention, thereby increasing scrutiny of potential conflicts of interest, hidden markups and whether negotiated savings passed through to plans.

The practical takeaway is that the greatest risk is no longer compensation itself, but compensation that is undisclosed, inadequately disclosed or unsupported by a prudent process. In today’s environment, consultants and brokers should expect heightened scrutiny not only regarding what they are paid, but also how those payments are disclosed, benchmarked, documented and justified.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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