Breach of Fiduciary Duty

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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 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

Retirement plan participants received a partial victory from the Eighth Circuit Court of Appeals in one of several actions brought against large universities for the alleged mismanagement of their section 403(b) retirement-savings plans. In Davis v. Washington Univ. in St. Louis, No. 18-3345, __F.3d__, 2020 WL 2609865 (8th Cir. May 22, 2020), the plan participants alleged two separate breach of fiduciary duty claims. The first claim alleges that Washington University allowed the investment-management fees and record-keeping expenses “to get out of control.” The second claim alleges that Washington University allowed several underperforming investments to stay in the plan for too long. The district court (E.D. Mo. – St. Louis) granted the University’s motion to dismiss both claims. The plan participants appealed. The Eighth Circuit affirmed in part, reversed in part, and remanded for further proceedings.
Continue Reading Eighth Circuit Revives Excessive Fee Litigation against Washington University