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In this week’s notable decision, Doe v. Express Scripts, Inc., No. 18-346, __F.App’x__, 2020 WL 7133860 (2d Cir. Dec. 7, 2020), the Second Circuit Court of Appeals further defines what it means to be an ERISA fiduciary. In short, a health benefits company that enters a pharmacy benefits manager (“PBM”) agreement involving a decision to sell a corporate asset is not acting in a fiduciary capacity. And a PBM is not acting in a fiduciary capacity when it sets prices for prescription drugs pursuant to the terms of a contract.    

In this case, Plaintiffs appeal a district court order dismissing their putative consolidated class actions against Anthem Inc. (a health benefits company that offers health plans and administrative services to self-funded health plans) and Express Scripts, Inc. (a PBM with a network of 97% of U.S. pharmacies) alleging that the companies violated their fiduciary duties under ERISA in setting prescription drug prices. The alleged nefarious transaction was the following: Anthem and Express Scripts entered a 10-year PBM Agreement that resulted in Express Scripts’ purchase of three PBM companies owned by Anthem, in exchange for Express Scripts paying $4.76 billion for the companies with Anthem’s agreement that Express Scripts could charge higher prices for prescription medications during the PBM Agreement. The other option, which the companies did not select, involved Express Scripts paying only $500 million in exchange for providing prescription medication at lower prices.
Continue Reading Second Circuit Sides with Anthem and Express Scripts in Dispute Over the Setting of Prescription Drug Prices

This week’s first notable decision is Davis v. Hartford Life & Accident Ins. Co., No. 19-6091, __F.3d__, 2020 WL 6789448 (6th Cir. Nov. 19, 2020), where the Sixth Circuit held that the arbitrary-and-capricious standard of review applied to Hartford’s decision to terminate Davis’s long-term disability (“LTD”) benefits and that Hartford’s decision was not arbitrary and capricious.

Davis stopped working due to chronic back pain, neuropathy, and fatigue caused by multiple myeloma. Hartford approved his LTD claim and paid him 24 months of benefits under the policy’s Own Occupation definition of disability. While investigating whether Davis would continue to qualify for benefits when the policy’s definition of disability changed from Own Occupation to Any Occupation, Hartford conducted surveillance, obtained two reviews of Davis’ medical records, and had Davis examined by an orthopedic surgeon. Hartford showed some of the surveillance footage to Davis’s treating doctors. After viewing surveillance video, Davis’s primary care doctor and neurologist both responded to Hartford that Davis was capable of full-time work.
Continue Reading Sixth Circuit Applies Deferential Standard of Review to Hartford’s Decision to Terminate Long-Term Disability Benefits

This week’s notable decision comes from the Sixth Circuit in Zirbel v. Ford Motor Company, ___F.3d___, 2020 WL 6704157 (6th Cir. 2020). Plaintiff Donna Zirbel received a $351,000 retirement-benefits payment from Ford Motor Company (“Ford”). But the payment was two sizes too big. When Ford learned of the mistake, it asked for the extra money back. Zirbel refused. She sued Ford, seeking a declaration that she could keep the money. Ford stood by its decision. The district court granted summary judgment to Ford, requiring Zirbel to return the $243,190 in overpayments. Plaintiff appealed and the Sixth Circuit affirmed. 
Continue Reading Sixth Circuit Permits Ford Motor Company an Equitable Lien on Overpaid Retirement Benefits