This was a fun week if, like me, you enjoy reading about ERISA and insurance issues. There was a lot to pay attention to, but for purposes of this weekly post, I narrowed it down to articles on nuclear verdicts, cyber insurance, regulatory initiatives targeted at PBMs and drug pricing, the continued boom in ERISA class actions, and how to avoid ending up a defendant in an ERISA class action.

  1. I can’t say it enough. What started out as a tort law phenomenon is now an employment law phenomenon. Nuclear verdicts are now being reported enough with regard to employment law claims that it now mirrors the early days of the rise of nuclear verdicts in personal injury and product liability litigation. Here’s another example, with a $52 million verdict. And here’s my post from two years ago, pointing out that employment litigation is the next great frontier with regard to nuclear verdicts. Employers and EPLI insurers should prepare for this problem now, and not just try to close the barn door after the horse is already out and on the run. There are many lessons from the development of nuclear verdicts in the personal injury world that employers, EPLI insurers and their lawyers can draw on at this point for these purposes. I have written a lot on those lessons, including here, here and here. The key takeaway for the employment law bar and EPLI insurers from the experience with this phenomenon in the tort world is simple. You have to study cases, anticipate which cases pose real risks of nuclear verdicts, and decide what you are going to do about it prospectively – settle or choose a tactic for trial that will reduce the risk – but what you cannot do is wait until after the verdict comes in to address the potential exposure.
  2. Sunshine is the greatest disinfectant when it comes to buried costs in ERISA plans – and the hammer to driving down those costs tends to be a class action bar with access to that information. That, anyway, is one lesson you can draw from the history of regulatory reform and disclosure with regard to the costs built into 401(k) plans. We are about to watch the same story play out in a sequel, this time concerning drug costs and the role of pharmacy benefit managers. This is a great Lockton report on what’s coming and what’s changing.
  3. Does a week go by that I don’t comment on cyber insurance issues in my weekly Five Favorites for Friday post? I am sure it happens, but it doesn’t actually feel like it happens. That’s because, as this article points out, “cyber insurance continues its growth trajectory as the fastest-growing global insurance product.” At the same time, as the article points out about the UK market, a massive percentage of businesses are either uninsured or underinsured for the risk. As I discussed last week, unless and until those two factors come into alignment, and most exposures are insured as a matter of course, business leaders will continue to fret disproportionately about cyber liabilities and the risk will remain central to business planning.
  4. They didn’t bury the lede. This is the first sentence of Encore Fiduciary’s blog post reviewing developments in ERISA class action litigation in 2025: “2025 saw a near-record high 155 fiduciary class lawsuits filed by plaintiff firms alleging violations of ERISA and breaches of fiduciary duty.” Pretty much everything you want to know, from a 30,000 foot level, of what that means is in the blog post. My favorite takeaway is that 401(k) plans remain the most popular target, but the run is on to sue fiduciaries and plan sponsors over health benefits.
  5. But with regard to the ever-expanding numbers of ERISA class actions, plan sponsors and fiduciaries too often lose sight of the fact that they can defend these cases simply by having put in the work in administering the plan, doing a good enough job, and documenting what they did. Perfection isn’t close to the test. As this excellent review of controlling law on fiduciary liability in Bloomberg Law, penned by ERISA lawyer Samuel Krause, puts it, “fiduciary risk” is dependent on ” the quality of the process and the paper trail that supports it.” So if you run a benefit plan and don’t want to end up another statistic in Encore Fiduciary’s mathematical breakdown of ERISA class actions, put a good process in place and document that you followed it.