- On June 24, 2026
A new federal court ruling came out of a 401(k) lawsuit, but the lesson is one every benefits broker should bring to their health and welfare clients. The case in one line: “Sometimes, even a good process produces disappointing results.”
On June 22, 2026, the Third Circuit sided with Quest Diagnostics against employees who claimed the company kept underperforming investments in its 401(k). The court’s reasoning is the part that matters for you: Quest didn’t win because it picked the best funds. It won because it followed a prudent, documented process. As the court put it, “Sometimes, even a good process produces disappointing results.” 1
Why This Isn’t Just a Retirement Story
The same ERISA duty of prudence that governs a 401(k) menu governs how your clients choose and monitor their health plan vendors: carriers, TPAs, PBMs, and stop-loss. With new CAA fee-transparency rules, health plan fiduciaries are under the same microscope. The question a court will ask is identical: Did you follow a reasonable process, and can you prove it?
The three things Quest did right—and your clients should too:
- Hire good advisors, but stay engaged. The court warned that “blindly following” an advisor can itself be a breach. Your clients need to understand the why behind a recommendation—whether it’s a fund or a carrier renewal, not just sign off.
- Document everything. Quest won because it could show what it did, when, and why. Regular committee meetings, real minutes, and a record of every vendor review and renewal decision are what turn a stray email into “a scintilla of evidence” instead of a smoking gun.
- Keep your governing documents flexible. Quest’s policy used words like “may” and said “no single factor” forced its hand, so the court couldn’t hold it to a rigid rule. Build discretion into your clients’ plan documents and committee charters, and document why any decision was reasonable.
Use this ruling to open a governance check-up with every plan client—retirement, health, and welfare. A few questions to ask:
- Does the committee meet on a regular cadence with documented minutes?
- Is fiduciary training happening at least annually?
- Are vendor and advisor recommendations being challenged, not just accepted?
- Is every decision and the reasoning behind it written down?
If the answer to any of these is “no” or “I’m not sure,” that’s your conversation to start.
1 Quest Diagnostics ERISA Litig. v. Quest Diagnostics Inc., No. 24-2866, 2026 U.S. App. LEXIS 17979 (3d Cir. June 22, 2026)
This document is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.