Johnson v. Abbott Labs Targets Traditional PPO as a $1,600 Annual Waste
Identical Coverage, Materially Higher Costs
Three Abbott Laboratories health-plan participants filed a class action complaint on July 14, 2026, asserting that the company breached its fiduciary duties under ERISA by offering and retaining a Traditional PPO option that required substantially higher payroll contributions than an available alternative without providing any additional benefits or services. The complaint alleges that the Traditional PPO required higher payroll contributions across all coverage tiers—$1,926 annually for employee-only coverage in 2026, compared to $300 for the HIP PPO (Compl. ¶85). Employees contributed an average of $1,368 annually for employee-only coverage and $6,296 for family coverage (Compl. ¶35).
The Traditional PPO and HIP PPO provided the same nationwide provider network and covered identical medical services, including inpatient and outpatient care, physician services, diagnostics, preventive care, and specialty services. The only difference, according to the filing, was in how participants paid for coverage: the Traditional PPO imposed higher payroll contributions, while the HIP PPO featured lower contributions but a higher deductible and eligibility for a health savings account. The average deductible for employee-only coverage in employer-sponsored plans was $1,700 (Compl. ¶44).
Plaintiffs Robbin Johnson, Michael Gulotta, and Sara Lundborg contend that the Traditional PPO was a "dominated" option—one that cost more for the same coverage at every level of healthcare spending. The complaint cites Abbott’s enrollment materials, which stated that "over 95% of employees in the Traditional PPO actually would save money if enrolled in the HIP PPO" (Compl. ¶124). The complaint also highlights that "Defendant knew, or should have known, that participants who chose the more expensive option (i.e., the Traditional PPO) would virtually always pay more for the same covered medical treatment" (Compl. ¶2).
Cost Disparities Across All Spending Levels
The complaint provides specific cost comparisons to illustrate the alleged imprudence of the Traditional PPO. For the 2026 plan year, the filing states that participants in the Traditional PPO paid significantly higher annual contributions than those in the HIP PPO:
- Employee-only coverage: $1,926 (Traditional PPO) vs. $300 (HIP PPO).
- Employee + spouse/domestic partner: $4,374 vs. $1,140.
- Employee + child(ren): $3,552 vs. $600.
- Employee + family: $5,768 vs. $1,200.
The complaint states that no prudent fiduciary would maintain an option that is "virtually always worse for participants," consistent with established ERISA precedent requiring fiduciaries to act solely in participants' best interests (Compl. ¶100). The complaint further asserts that "a prudent fiduciary acting solely in participants’ best interests would not have offered the Traditional PPO when the HIP PPO was also available" (Compl. ¶6).
Abbott’s Alleged Knowledge and Failure to Act
The complaint alleges that Abbott Laboratories, as the plan sponsor, administrator, and named fiduciary, knew or should have known that the Traditional PPO was more expensive. The filing cites Abbott’s own enrollment materials, which stated that "over 95% of employees in the Traditional PPO actually would save money if enrolled in the HIP PPO" (Compl. ¶124). In 2017, Abbott published an annual benefits guide representing that "over 90% of employees would spend less by enrolling in the HIP PPO vs. Traditional PPO" (Compl. ¶127). Despite this, the complaint alleges that Abbott continued to offer the Traditional PPO without disclosing its higher costs or removing it from the plan menu.
As a self-funded plan, Abbott set premiums, deductibles, and participant contributions, with payroll deductions becoming plan assets upon withholding (Compl. ¶71). The filing argues that Abbott’s failure to monitor or eliminate the Traditional PPO violated its fiduciary duties under ERISA, which require fiduciaries to act prudently and solely in participants' best interests. The complaint asserts that "Defendant’s acts and omissions have caused millions of dollars in losses to the proposed class" (Compl. ¶8). Plaintiffs contend that they and other participants incurred higher costs that are traceable to Abbott’s conduct, stating that "Plaintiffs therefore suffered a concrete financial injury that is fairly traceable to Defendant’s conduct and redressable through the relief sought in this action" (Compl. ¶29).
ERISA Claims and Sought Relief
The complaint asserts four counts against Abbott Laboratories:
- Count I: Breach of fiduciary duty under ERISA, 29 U.S.C. § 1104(a)(1)(A)–(B): Alleging Abbott failed to act prudently and solely in participants’ best interests by offering and retaining the Traditional PPO.
- Count II: Prohibited transaction under ERISA, 29 U.S.C. § 1106: Alleging Abbott engaged in transactions that constituted a prohibited conflict of interest by maintaining the Traditional PPO.
- Count III: Breach of fiduciary duty – Failure to disclose material information, 29 U.S.C. § 1104(a)(1): Alleging Abbott failed to disclose the higher costs of the Traditional PPO, which could have influenced participants’ enrollment decisions.
- Count IV: Breach of fiduciary duty – Failure to monitor fiduciaries, 29 C.F.R. § 2509.75-8: Alleging Abbott failed to monitor and remove imprudent plan options.
Plaintiffs seek relief under ERISA civil enforcement provisions, 29 U.S.C. § 1132(a)(2) and (a)(3). They seek class certification under Federal Rule of Civil Procedure 23, as well as recovery of all losses to the plan caused by Abbott’s alleged fiduciary breaches. The complaint also requests injunctive relief enjoining Abbott from further violations of its ERISA fiduciary responsibilities, removal of the Traditional PPO option from the plan, and an award of attorneys’ fees and costs pursuant to 29 U.S.C. § 1132(g).
Broader Context: ERISA Litigation and Employer-Sponsored Health Plans
The complaint situates the case within a broader wave of ERISA litigation challenging the prudence of employer-sponsored health plan options. The filing cites numerous cases in which courts have held that fiduciaries must act prudently in selecting and monitoring plan options, including prior litigation involving large employers and universities. The complaint references a unanimous U.S. Supreme Court decision in Hughes v. Northwestern University (2022), reinforcing the duty of fiduciaries to act in participants' best interests, and another unanimous U.S. Supreme Court victory in Cunningham v. Cornell University (2025) (Compl. ¶155-156).
The complaint also references a 2023 study of 24,000 participants, which found that 61% selected health-plan options that cost more for the same coverage (Compl. ¶56). Plaintiffs argue that ERISA places the responsibility for prudent option selection on fiduciaries, stating that "ERISA places the responsibility for prudent option selection on fiduciaries, not on participants" (Compl. ¶57). Employers possess the tools and data to assess the value of health insurance options, including the ability to analyze healthcare spending scenarios, such as low and high spending levels (Compl. ¶58).
The complaint highlights the significant impact of ERISA litigation on American workers, attributing $2.8 billion in annual savings to litigation by Schlichter Bogard LLC and Department of Labor regulations (Compl. ¶152). The filing cites several cases where Schlichter Bogard secured substantial recoveries for plan participants, including Bell v. Pension Committee of ATH Holding Co., LLC, which resulted in a monetary recovery of $23.65 million and a total value of over $62 million for plan participants (Compl. ¶152). In Nolte v. Cigna, the firm secured a $35 million recovery for plan participants (Compl. ¶152). Additionally, Schlichter Bogard incurred over $2,000,000 in out-of-pocket expenses in Tussey v. ABB (Compl. ¶152).
The health benefits market is substantial, with the complaint noting that it covers 154 million nonelderly people with employer-sponsored health benefits (Compl. ¶55). In 2023, 100 million individuals had employer-sponsored health insurance, representing 53.8% of the total U.S. population covered through such plans in 2024 (Compl. ¶55). Despite this, the complaint asserts that employees often lack the resources or data to evaluate health insurance options effectively, stating that "employees often lack the resources or data to evaluate health insurance options" (Compl. ¶53). Employers, however, have the tools to assess the value of these options and ensure that plan expenses are reasonable (Compl. ¶52-53).
The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.
David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.
From the Complaint Public Court Record
1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION ROBBIN JOHNSON, MICHAEL GULOTTA, and SARA LUNDBORG, individually and as representatives of a class of participants and beneficiaries on behalf of the ABBOTT LABORATORIES HEALTH CARE PLAN, Plaintiffs, v. ABBOTT LABORATORIES, Defendant. Civil Action No. 1:26-cv-8304 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED NATURE OF THE ACTION 1.Plaintiffs Robbin Johnson, Michael Gulotta, and Sara Lundborg (“Plaintiffs”), as representatives of the putative class, and on behalf of the Abbott Laboratories Health Care Plan (the “Plan”), bring this action under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1104 and 1106, and pursuant to ERISA’s civil enforcement provision, 29 U.S.C. § 1132(a)(2) and (a)(3), against defendant Abbott Laboratories (“Abbott” or “Defendant”). 2.This is a case about excessive healthcare costs charged to Plaintiffs and other Plan participants. Defendant offered two health insurance options to Plan participants that provided the same medical coverage. One health insurance option, the Traditional PPO, cost participants more. The other option, the HIP PPO, cost participants less. Defendant knew, or should have known, that participants who chose the more expensive option (i.e., the Traditional PPO) would virtually always pay more for the same covered medical treatment – yet Defendant continued to offer that more expensive health insurance option to Plan participants for years. Case: 1:26-cv-08304 Document #: 1 Filed: 07/14/26 Page 1 of 44 PageID #:1
2 3. Although this action is brought derivatively on behalf of the Plan under 29 U.S.C. § 1132(a)(2), Defendant’s fiduciary breaches also caused substantial financial harm to the Plan’s participants and beneficiaries. By maintaining an imprudent and unnecessarily costly health insurance option, Defendant caused the Plan to incur excessive costs while requiring participants
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