Plaintiffs Double Down On Challenges To PBM Arrangements In Class Action Lawsuits Involving Johnson & Johnson And JPMorganChase

Published: 2025-03-27 02:10:07 ET JNJ

On March 10, 2024, the plaintiffs filed an amended complaint in a much-followed putative class action lawsuit against Johnson & Johnson ("J&J") alleging that the plan fiduciaries for J&J's group health plan violated ERISA by mismanaging its self-funded health plan's prescription drug benefit. See our prior alerts on the J&J litigation here and here.

Several days after the plaintiffs filed an amended complaint in the J&J litigation, the same plaintiffs' counsel team filed a substantially similar complaint against another large employer, JPMorganChase & Co. ("JPMorgan").

Groom's key takeaways regarding the J&J amended complaint and the trajectory of health plan fee litigation are as follows:

A detailed discussion of these developments follows.

The J&J Amended Complaint

As we previously described in detail, last year plaintiff Anne Lewandowski filed a lawsuit against J&J alleging that the plan fiduciaries mismanaged the prescription drug benefit of the company's employer-sponsored health plan, resulting in economic harm in the form of higher premiums and out-of-pocket costs.

The district court dismissed the case because none of the plaintiff's alleged injuries satisfied the requirements of Article III standing, i.e., (i) an injury-in-fact, (ii) that was caused by the employer's alleged ERISA violation, and (iii) is redressable by the court.

Ms. Lewandowski, along with a second plaintiff, filed an amended complaint which attempts to address the deficiencies identified in the district court's opinion.

Higher Premiums

The district court previously held that plaintiff's alleged injury due to the payment of higher premiums, higher deductibles, higher coinsurance, and higher copays, and lower wages or limited wage growth for employees was "at best" speculative and hypothetical because (i) the plaintiff failed to allege that the employer's conduct resulted in the payment of higher premiums and (ii) the plaintiff failed to assert allegations comparing the premiums charged by the J&J plan to those charged by other plans.

The amended complaint attempts to cure this deficiency by trying to tie higher prescription drug costs to higher premium contributions for plan participants. Specifically, the amended complaint alleges:

GROOM INSIGHT:

Higher Out-of-Pocket Costs

The district court previously held that Ms. Lewandowski's alleged injury due to higher out-of-pocket costs was not redressable. This was due in large part to J&J's demonstration that Ms. Lewandowski would have hit the plan's maximum limit on out-of-pocket expenses based on her medical expenses alone (aside from prescription drug costs). As a result, Ms. Lewandowski's out-of-pocket costs would have been the same even if she paid less for the drugs identified in the complaint.

The amended complaint alleges that in 2023, Ms. Lewandowski paid higher out-of-pocket amounts for certain prescription drugs before she hit the plan's out-of-pocket maximum. Further, the amended complaint alleges that Ms. Lewandowski suffered a reduction in her cash position when she paid more out-of-pocket for those prescription drugs. The amended complaint also added a new plaintiff to the lawsuit. The new plaintiff alleges to have paid a higher copay amount for a generic drug in comparison to various benchmarks. Further, unlike Ms. Lewandowski, the new plaintiff alleges that he did not hit the plan's out-of-pocket maximum for the years at issue.

GROOM INSIGHT:

What's Next?

We anticipate the defendants in the J&J case will again file a motion to dismiss - this time seeking to dismiss the amended complaint. As before, we expect J&J to challenge whether the amended allegations adequately allege Article III standing, as well as whether the amended complaint plausibly alleges a claim for relief. To the extent the district court finds that one or both plaintiffs have alleged Article III standing, the district court will need to address whether the employer was acting as an ERISA fiduciary when setting premiums and selecting and managing the plan's pharmacy benefit manager and/or the pleading standard applicable to excessive fee claims in the context of a health plan.

The resolution of the anticipated motion to dismiss will likely have an impact on the trajectory of health plan fee litigation, i.e., whether we see a wave of similar putative class actions filed by health plan participants against employers or whether the plaintiffs' bar pivots in how it approaches excessive fee cases in the health plan context.

Indeed, just days after the plaintiffs in the J&J case filed the amended complaint, the same team of plaintiffs' counsel filed a new complaint against another large employer, JPMorgan, asserting substantially similar allegations related to the employer's purported mismanagement of its self-funded health plan's prescription drug benefit. This case was filed on March 13, 2025 in the United States District Court for the Southern District of New York.

Like the amended complaint filed in the J&J case, the plaintiffs in this new complaint against JPMorgan allege:

This is an area of litigation that is continuing to develop. We are monitoring plaintiffs' evolving theories of liability in these cases.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Seth Perretta Groom Law Group 1701 Pennsylvania Ave., NW, Suite 1200, Washington, DC 20006 UNITED STATES Tel: 202857 0620 Fax: 202659 4503 E-mail: slherisse@groom.com URL: www.groom.com