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A lawsuit brought forth by a group of cancer patients could spell trouble for health insurers, according to legal experts.

The plaintiffs claim an insurer violated federal law when it abruptly terminated their coverage in late 2022 following a corporate acquisition.

“This case involves a situation none of us hopes to ever be in — having coverage terminated while receiving payment for an ongoing claim,” according to the class action complaint that alleges violations of the Employee Retirement Income Security Act (ERISA) by health plans.

In the lawsuit, filed in late 2024, the patients allege that the sudden coverage termination runs afoul of ERISA, and they want their coverage restored. Specifically, the plaintiffs allege that their health insurers, acting as plan fiduciaries, breached their obligations under ERISA by ending health coverage while the patients had ongoing claims for their cancer treatments.

The recent class action lawsuit is part of a growing trend of legal cases arguing that health insurers are violating ERISA, legal experts said.

ERISA is a federal law established in 1974 that regulates employee benefit plans and determines standards that retirement and health plans must meet. Historically, case law has enabled such health plans to change or end coverage as they see fit. In 1995, US Supreme Court justices solidified this power, ruling that, under ERISA, employers and plan sponsors are generally free to adopt, modify, or terminate welfare plans for any reason, at any time.

“We’re talking about 30 years, roughly, of jurisprudence that has basically said health insurance plans can be amended and terminated essentially at will,” said Maria O’Brien, JD, a professor at Boston University School of Law, Boston, who specializes in insurance law and is not involved in the current case.

But “there’s been a lot of talk in the last year now about trying to get the courts to be much more aggressive about enforcing fiduciary duties on the health insurance side,” O’Brien said.

The outcome of this recent lawsuit could lead to such changes and help provide more protections to patients.

“I think it’s going to be very interesting to watch and see what happens” with this case, O’Brien said.

“If the patients prevail and plans’ fiduciary duty is more closely scrutinized, that would undo many years of ERISA jurisprudence,” O’Brien explained. “Many plans would be scrambling to figure out how they could make changes going forward.”

The Recent Case: Why Did Patients Sue?

In the current case, three cancer patients, residing in various states, filed a class action lawsuit in November 2024 against three companies — Medical Mutual of Ohio, Reserve National Insurance Company, and Kemper Life and Health Company.

Reserve National had provided supplemental health coverage to the plaintiffs through their employer-sponsored health plans until it was acquired by Medical Mutual of Ohio in December 2022. Kemper Health is named as a defendant because Reserve National was a subsidiary of Kemper Health at the time the policy was granted.

The patients involved in the suit, each had an ERISA plan that included supplement coverage benefits called a Group Cancer and Specified Disease Policy, according to the complaint. Plaintiffs alleged that, as part of the policy, Reserve National agreed to pay benefits for a “positive diagnosis” that began after the coverage effective date, and that the policy allowed the patients to port, or continue, their coverage under certain circumstances, including in the event of an employment change or cancellation of the underlying group policy.

While covered under Reserve National, the plaintiffs received a cancer diagnosis. Dana Peppers from Lawrenceburg, Tennessee, was diagnosed with breast cancer, William Borden from Mindenmines, Missouri, was diagnosed with colon cancer, and Cynthia Gipson from Fruitvale, Texas, was diagnosed with chronic myelogenous leukemia, according to the complaint.

Reserve National began making payments for the patients’ insurance claims related to their cancer diagnoses. But after Medical Mutual acquired Reserve National in early December 2022, things took a turn.

Just days after the acquisition became official, the plaintiffs received letters from Kemper Health, on behalf of Reserve National, stating that their cancer coverage would be terminated on February 28, 2023. No explanation was given.

According to the complaint, the termination letter is believed to be a standard form letter sent to all group plan participants who had, at one time, invoked a provision known as the Portability Provision of the Cancer and Specified Disease Policy. All three patients had previously invoked this provision.

Shortly after the acquisition, the insurers terminated coverage for all individuals who had used that portability provision, “in effect closing a book of business that was providing cancer and dread disease coverage to over 30,000 insureds,” according to the complaint.

A spokeswoman for Medical Mutual said the company does not comment on pending litigation, and the insurer has not yet issued a legal response to the complaint. Attorneys for the plaintiffs did not respond to requests for comment. Messages left with the patients were not returned.

In the complaint, the plaintiffs were asking the US District Court for the Middle District of Tennessee for an injunction compelling Medical Mutual, Reserve National, and Kemper Health to reinstate their group policy coverage and that of all similarly situated group policy participants.

“Plaintiffs and putative class members reasonably expected to obtain the benefits described in their certificates if they or a covered member of their family was diagnosed with cancer or a specified disease,” the plaintiffs’ attorneys wrote in the complaint. “Defendants failed to maintain their end of the bargain.”

The Bigger Picture 

In recent years, there has been an increasing number of legal cases arguing that health insurers are violating ERISA, and specifically their fiduciary responsibilities under ERISA.

In general, according to O’Brien, it can be challenging to prove that plans violated their fiduciary duties under ERISA. As part of their legal obligations, fiduciaries such as health insurers are required to act prudently and in the best interests of plan participants. Typically, when plaintiffs sue a fiduciary, they must prove three elements, according to O’Brien: The defendants acted as fiduciaries, the defendants breached their duties, and the breach or breaches caused harm.

In one recent case — Lewandowski v. Johnson & Johnson — a patient claimed her plan’s fiduciaries mismanaged the health plan’s prescription drug benefit, leading to inflated drug prices that cost employees millions in higher payments for prescription drugs, premiums, deductibles, coinsurance, and copays. The plaintiff argued Johnson & Johnson and an administrative committee violated its fiduciary duties under ERISA by failing to act in the best interest of participants and beneficiaries.

Johnson & Johnson argued the patient received all benefits she was contractually entitled to and could prove no injury or harm. The company presented evidence, for instance, that the patient had incurred significant medical expenses and would have reached the plan’s out-of-pocket expenses cap for the year, even if her prescription drug costs were different.

In January 2025, the US District Court for the District of New Jersey granted Johnson & Johnson’s motion to dismiss two central claims in the case, finding the patient could show no redressable injury. The court, however, upheld the third claim related to the insurer not providing timely documentation to the plaintiff.

“While the judge did dismiss two of the claims, it's without prejudice, so the plaintiff can still refile with different facts to support her claim,” explained Amy Monahan, JD, a law professor and benefits law expert at the University of Minnesota Law School in Minneapolis.

In another recent case — Navarro vs Wells Fargo — patients similarly claimed that Wells Fargo & Company failed their fiduciary duties by mismanaging the company’s health plan and causing patients to pay excessive costs for prescription drugs. Attorneys for Wells Fargo have requested a judge throw out the suit, arguing the plaintiffs can prove no redressable harm. The case is pending before the US District Court for the District of Minnesota.

“Navarro, by the terms of its complaint, looks very similar to Lewandowski,” Monahan said. But “they’re in different circuits, so it’s possible that there could be different rulings in Lewandowski vs Navarro, even with very similar factual allegations.” 

Other ERISA cases have alleged improper health insurer coverage restrictions or denials, especially for radiation therapy known as proton beam therapy.

In one such case, plaintiff Kate Weissman sued UnitedHealthcare for denying coverage of proton beam therapy to treat her cervical cancer. According to the complaint, Weissman’s doctors had concluded that proton beam therapy, for at least part of her treatment course, "was essential" and contacted UnitedHealthcare to request prior authorization for the therapy. UnitedHealthcare denied coverage.

In the complaint, Weissman alleged that UnitedHealthcare breached its fiduciary duty under ERISA by denying coverage for a medically necessary cancer treatment. Weissman's class action suit covered herself as well as any similarly situated individuals whose requests for proton beam therapy were denied or will be denied, “based upon a determination by UnitedHealthcare that [proton beam therapy] is not medically necessary or is experimental, investigational or unproven.”

In March 2021, the US District Court for the District of Massachusetts denied UnitedHealthcare’s motion to dismiss the case, and earlier this year, UnitedHealthcare agreed to resolve the proposed class action lawsuit, the terms of which were not publicly disclosed.

Overall, O’Brien and Monahan agreed that the increase in health plan litigation involving ERISA could lead to changes that ultimately benefit patients. This kind of shift did happen following many lawsuits involving the retirement plan side of ERISA, Monahan noted. A 2018 analysis, for example, found a rise in 401(k) plan class action litigation was associated with a downward trend in health plan fees and a rise in low-cost index funds, which are perceived as less vulnerable to litigation.

“As you get a lot of class action litigation, employers spend more time focusing on it,” Monahan explained. “It becomes a liability risk they’re concerned with, so they devote more time and attention to it.”

“I don't think it will take very many of them being successful to get the ball rolling, where all of a sudden there’s going to be a lot more attention paid to these contracts,” she added.

In the Medical Mutual case, if the patients are successful, the outcome could potentially impact whether health plans can change, modify, or terminate plans at will. And ultimately, O’Brien noted, the aim is for courts begin to “endorse a much more robust understanding of the responsibilities of fiduciaries when it comes to [individuals’] health and welfare.”