Sedgwick Lawsuit: $3 Million Tobacco Surcharge Settlement Up for Final Approval
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The Sedgwick lawsuit in the news is Bailey v. Sedgwick Claims Management Services, an employee class action over the extra charge Sedgwick's own health plan billed to tobacco users. Sedgwick agreed to pay $3 million. A federal judge in Memphis holds the final approval hearing on October 9, 2026. Only Sedgwick employees and their plan dependents who paid the surcharge are in the class — not people whose insurance or disability claim Sedgwick handled.
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Reviewed by Leonard Goldberg, Editor · Last updated
What the Sedgwick Class Action Lawsuit Alleges
Sedgwick charges employees on its welfare benefits plan who use tobacco a surcharge. In 2024 that was $50 per pay period, or $1,300 a year, capped at $150 per family per pay period. Employees can avoid it through a cessation program called Quit for Life — but only an employee who finishes by June 30 gets the earlier surcharges for that year refunded. Finish later, and the charge simply stops.
The lawsuit alleges that this set-up violates ERISA: that the surcharge is discriminatory, that Quit for Life is not a valid “reasonable alternative standard” because it does not pay back the full year, and that plan materials failed to give the required notice. Sedgwick disputed the claims and has not admitted wrongdoing.
Case Details
Bailey v. Sedgwick Claims Management Services, Inc., No. 2:24-cv-02749-TLP-tmp, U.S. District Court for the Western District of Tennessee (Memphis), before Judge Thomas L. Parker. It was filed on October 8, 2024. On September 26, 2025 the court granted in part and denied in part Sedgwick's motion to dismiss, keeping the case alive. On June 8, 2026 it granted preliminary approval of the settlement (ECF No. 97).
A footnote in that order says the first approval motion (ECF No. 91) cited cases that did not exist, which plaintiff's counsel agreed was most likely the result of an AI tool. The court ordered a corrected motion and imposed no sanctions. That episode does not change the settlement terms.
Status: Settled, Final Approval Hearing October 9, 2026
The administrator is CPT Group, which runs the official case page at cptgroupcaseinfo.com/SCMSSettlement. No payment date has been published yet. Payments cannot go out before final approval and the end of any appeal period.
Who Is Covered by the Sedgwick Class Action
The court's class definition covers people who meet all of these:
— live in the United States;
— were a participant or beneficiary in the Sedgwick Welfare Benefits Plan at any point from October 8, 2018 through June 8, 2026;
— paid a tobacco or nicotine surcharge in that period; and
— were not fully reimbursed for it.
Bloomberg Law put the group at about 5,000 people. This is a non-opt-out class under Rule 23(b)(1): you cannot exclude yourself, and you will be bound by the outcome. Class members are found through plan records, and the order requires notice by U.S. Mail. If you file a lawsuit against Sedgwick over a denied workers' compensation, disability or liability claim, that is a separate matter and is not part of this settlement.
How Much the Settlement Pays
No per-person amount has been published. Payments should track how much surcharge each person paid, so long-time payers would likely get more than people who paid briefly. The preliminary approval order describes mailed notice and an allocation plan, not a claim form. Your mailed notice is the authority on how you get paid.
How cases like this one end
Our copy of the federal courts’ own case database covers 62,689 erisa casesclosed in U.S. federal district courts between 2015 and 2025, 1.8% of them filed as class actions:
- 42.8% ended in a settlement recorded by the court. Another 23% were dismissed voluntarily, which often follows a private settlement — so the real settlement share sits between 42.8% and 65.8%.
- 6.3% were decided on a motion before any trial.
- 1 in 297 reached a trial (0.3%), after a median of 21.8 months.
- Median time from filing to the end of the case: 6.2 months.
- Only 4,861 of them (7.8%) record a money award at all; the median of those is $100,000.
These are base rates for this type of case (federal erisa cases) — not a prediction about this lawsuit, and not legal advice. Source: Federal Judicial Center, Integrated Database (civil), analysed by Settlement Insight. Cases heard in state courts are not included.
Sedgwick Tobacco Surcharge Lawsuit Timeline
- 1
October 8, 2018 — Class Period Begins
The settlement covers unreimbursed tobacco or nicotine surcharges paid on Sedgwick's plan from this date onward.
- 2
October 8, 2024 — Lawsuit Filed
A Sedgwick employee sues in the Western District of Tennessee under ERISA, No. 2:24-cv-02749.
- 3
September 26, 2025 — Case Survives Dismissal
Judge Parker grants in part and denies in part Sedgwick's motion to dismiss. Most of the case goes forward.
- 4
June 8, 2026 — Preliminary Approval
The court preliminarily approves the $3 million settlement and preliminarily finds the case may proceed as a non-opt-out class. This follows a corrected motion that replaced citations to cases that did not exist.
- 5
September 25, 2026 — Objection Deadline
This was the last day to file a written objection, 14 days before the hearing. It has passed.
- 6
October 9, 2026 — Final Approval Hearing
Judge Parker decides whether to grant final approval, approve the allocation plan and rule on attorneys' fees. Payments follow only after approval.
Three Things to Watch For
Notice for this settlement went to about 5,000 people by mail, and it is easy for imposters to copy:
“Submit your Sedgwick claim to get paid” sites
The court order describes mailed notice and an allocation plan, not a claims portal. Check any link against the address on your mailed notice or CPT Group's official case page. Never enter your Social Security number on a site you found through an ad.
Messages to people Sedgwick handled a claim for
Sedgwick administers workers' comp, disability and insurance claims for many employers. Someone whose claim it handled is not in this class. A text saying your “Sedgwick settlement” is ready, sent to a claimant rather than a Sedgwick plan member, is fishing.
Fees to “release” your payment
Costs are taken out of the $3 million fund before anything is paid. A court-appointed administrator never asks class members to pay a processing fee or buy gift cards to receive a check.
Sedgwick Lawsuit — Questions People Actually Ask
What is the Sedgwick lawsuit in the news?
It is Bailey v. Sedgwick Claims Management Services, Inc., No. 2:24-cv-02749 (W.D. Tenn.). It is an ERISA class action over the tobacco surcharge on Sedgwick's employee health plan. Sedgwick agreed to a $3 million settlement, and the final approval hearing is October 9, 2026.
Is there a Sedgwick class action settlement claim form?
The preliminary approval order describes mailed notice and a court-reviewed Plan of Allocation. It does not describe a claim form. Class members are identified from plan records. Follow your mailed notice or CPT Group's official case page, not a third-party site.
Can I opt out?
No. The court preliminarily found the case may proceed as a non-opt-out class under Rule 23(b)(1), so every class member will be bound by any judgment. The way to disagree was a written objection filed 14 days before the hearing, by September 25, 2026. That deadline has passed.
When will payments be sent?
No date has been set. Payment can only follow final approval, which is considered at the October 9, 2026 hearing, and then the time for any appeal. Watch the official case page for a distribution date.
I had a workers' comp or disability claim handled by Sedgwick. Am I in a class action?
Not in this one. It only covers people on Sedgwick's own employee health plan who paid the tobacco surcharge. Disputes over a denied claim are usually individual cases; disability benefits under employer plans are often ERISA appeals. As of October 2026 no consumer class settlement for claimants is pending.
Are there other lawsuits against Sedgwick?
Yes. A former employee filed a proposed antitrust class action in the Northern District of Illinois on Dec. 20, 2024 (No. 1:24-cv-13084). It alleges secret no-poach agreements restrained employee mobility and lowered pay. We could not confirm a 2026 status. Earlier, a $1.6 million overtime settlement for 270 Disability Representative Senior employees in Illinois and Ohio received final approval. Sedgwick also paid $1.13 million to California's workers' comp regulator, as reported Jan. 7, 2016, without admitting wrongdoing.
Is there a Sedgwick data breach lawsuit?
Sedgwick Government Solutions, a federal contracting subsidiary, was named by a ransomware group in a breach discovered Jan 02, 2026, with a claimed leak of 3.39GB. As of October 2026 we found no class action or settlement over it.
Why did the judge mention AI in this case?
Plaintiff's first approval motion (ECF No. 91) cited cases that did not exist. Counsel said an AI tool most likely caused the errors. The court ordered a corrected motion (ECF No. 94), imposed no sanctions and granted preliminary approval. It does not affect what class members receive.
Separate from this case: were you injured in the last 2 years?
Class-action payouts are fixed amounts through an administrator. A personal injury claim is a different case — and often worth far more. Free estimate, no obligation.
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