Good morning, ERISA Watchers! Today’s notable decision is a good one for employee stock ownership plan (ESOP) participants. In Gamino v. KPC Healthcare Holdings, Inc. et al., No. 5:20-CV-01126-SB-SHK, 2021 WL 162643 (C.D. Cal. Jan. 15, 2021), District Judge Stanley Blumenfeld, Jr. denied motions to dismiss brought by several defendants against whom the
Second Circuit Sides with Anthem and Express Scripts in Dispute Over the Setting of Prescription Drug Prices
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
District Court Permits Retirees’ Breach of Fiduciary Duty Claim Based on Misrepresentation of Lifetime Health Benefits
This week’s notable decision is the district court opinion in Fitzwater, et al., v. Consol Energy, Inc., et al., No. 1:17-CV-03861, 2020 WL 6231207 (S.D.W. Va. Oct. 22, 2020), a case involving two key issues: (1) whether Plaintiffs, seven former employees of CONSOL Energy, Inc., were misled by ERISA plan fiduciaries about the nature and duration of their health benefits; and (2) whether Defendants discriminated against Plaintiffs based on health status-related factors in violation of ERISA. Specifically, Plaintiffs allege that Defendants made promises of lifetime medical insurance coverage to “non-union miners” and their beneficiaries, while Defendants dispute that any such representations were ever made. Defendants moved to dismiss all seven of Plaintiffs’ causes of action.
Continue Reading District Court Permits Retirees’ Breach of Fiduciary Duty Claim Based on Misrepresentation of Lifetime Health Benefits