This week’s notable decision, Rutledge v. Pharm. Care Mgmt., Case No. 18-540, —S.Ct.—, 2020 WL 7250098 (U.S. Dec. 10, 2020), is a major win for consumers and pharmacies clearing the way for states to pass laws and implement regulations regulating pharmacy benefit managers (“PBMs”), third party companies hired by insurers to adjudicate and reimburse pharmacies (many of them small) for the cost of drugs covered by prescription-drug plans. At issue before the Court was an Arkansas state law, Act 900, which sought to regulate PBM reimbursement prices to pharmacies for the drugs that ERISA beneficiaries and participants obtained as part of their health plan coverage. The question presented to the Court was whether Act 900 was preempted by ERISA.  Continue Reading Supreme Court Finds ERISA Does Not Preempt Arkansas State Law Regulating Pharmacy Benefit Managers

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, Pension Benefit Guar. Corp. v. 50509 Marine LLC, No. 19-14968, __ F.3d __, 2020 WL 6882698 (11th Cir. Nov. 24, 2020), published two days before Thanksgiving, should have been issued a month earlier, during the Halloween season, as it addresses a frightening issue: can a zombie corporation operate an ERISA-governed pension plan? The creepy answer: it can!

The facts of the case stretch back to the 1990s, when an electrical supply company called Liberty Lighting Company filed for bankruptcy under Illinois law. Liberty was administratively dissolved, and its assets surrendered to creditors. Liberty’s owner, Joseph Wortley, also filed for bankruptcy, and all his assets, including his stock in Liberty, were surrendered to a trustee. However, Wortley continued to act as the administrator of Liberty’s pension plan, signing papers on behalf of the plan to effectuate benefit payments, among other activities. Continue Reading Eleventh Circuit Holds Members of Controlled Group of Dissolved Corporation May be Liable for Pension Plan Termination Liabilities