The Healthcare Breakdown No. 063 - Breaking down The Rise (and Stall?) of Fiduciary Litigation in Employer Health Plans

Brought to you by the one and only Chris Deacon!

What we’re breaking down: All these lawsuits you have been seeing over employers spending dumb money on cheap drugs

Why it matters: This could represent a defining moment where employers are forced to stop enabling the rising costs of healthcare

Read time: About as long as it takes to get to the center of a tootsie pop (9 minutes for real though)

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Hello wonderful humans who love understanding the morass of the healthcare industry. It’s me, Preston. Could you tell?

Today, outside of this little intro, I won’t be talk writing.

Today’s episode is brought to you by someone much smarter, with wildly better grammar than me. She is an attorney, consultant, speaker, truth teller, disruptor, and thought leader.

I am talking about the one and only, inimitable, Chris Deacon!

Follow her on the Linky Land and stay tuned for her book coming out soon! Not only that, her daily posts will help you understand the latest developments in healthcare from the ever important legal perspective.

Also real quick, here’s a little primer on some key elements of today’s episode:

ERISA - Employee Retirement Income Security Act of 1974. This act is supposed to protect the financial interests of employees and beneficiaries of employer retirement and health plans. Key elements include: fiduciary duty, coverage, protection of plan assets, and disclosure.

Fiduciary - This is a legal and ethical obligation to act in the best interest of a beneficiary. It’s also real easy to make immature jokes about, but I will refrain.

The Consolidated Appropriations Act of 2021 - a run of the mill $2.3T spending bill that included some key evolutions in healthcare including price transparency, limitations on gag clauses, elimination of surprise billing, and increased fiduciary responsibility for employer sponsored health plans.

With these items in mind, there has been a recent spate of lawsuits whereby employees are claiming their employers are breaching their fiduciary duty (so hard not to…) by paying inordinate prices for coverage.

Without further ado, enter the real brains of today’s episode, Chris Deacon!

Follow her already!

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Almost three years ago, I was among the first to publicly predict a wave of ERISA fiduciary litigation aimed not just at 401(k) plans, but at employer-sponsored health plans. The Consolidated Appropriations Act of 2021 had just been signed into law, and it was one of the first congressional acknowledgements that group health plans—routinely the second-largest line item on an employer's income statement—demand the same level of oversight, prudence, and fiduciary care as retirement plans.

Back then, I imagined a near-immediate reckoning. I assumed general counsels and CFOs would begin poring over plan documents, PBM contracts, and data use agreements, asking hard questions about pricing, conflicts of interest, and whether they were truly operating in the best interest of their plan participants.

But unlike most politicians, I can admit when I’m wrong. And boy, was I wrong—at least about the speed.

That reckoning hasn’t happened at scale. Many C-suite leaders remain hesitant, disengaged, or overly deferential to their benefit consultants. And frankly, it’s not hard to see why. Many of the consulting firms most employers rely on for compliance guidance, strategic direction, and fiduciary insight are featured prominently in the allegations of these lawsuits—not as named defendants (yet), but as enablers of the very conflicts and overpayments at issue. So, it’s no wonder they’re not pulling the fire alarm.

If your consultant is a central figure in the alleged wrongdoing, they’re unlikely to wave the red flag and tell you to lawyer up. And yet, here we are. With three high-profile fiduciary lawsuits against household-name employers winding their way through the courts, the business of health benefits has never felt more exposed.

The Big Three Everyone is Talking About: Wells Fargo, Johnson & Johnson, and JP Morgan Chase

Over the past couple of years, three lawsuits have sought to hold large employers accountable under ERISA for the way they manage their pharmacy benefit plans. The core allegation is the same: that plan sponsors failed to act as prudent fiduciaries, resulting in higher costs for employees and the plan itself.

But while the facts are striking, the legal pathway is steep—and the procedural posture of these cases reveals just how hard it is for plaintiffs to establish the standing necessary to get their day in court.

Navarro v. Wells Fargo: The High Bar of Article III

Let’s start with Navarro v. Wells Fargo, filed in August 2024. Plaintiffs, former employees, alleged that the company’s health plan grossly overpaid for certain prescription drugs by selecting Express Scripts as its PBM without a competitive bidding process. The complaint cited drugs that cost the plan over $1,800 per fill when retail pharmacies could acquire them for less than $100.

And yet, the court dismissed the case—not because it found no wrongdoing, but because the plaintiffs lacked Article III standing. In short: the court held that the plaintiffs could not show a concrete injury directly traceable to Wells Fargo’s alleged mismanagement.

Why?

Because the plan operated like a defined benefit plan. Participants were promised access to a defined set of benefits, not cost savings. Even if Wells Fargo overpaid for PBM services, the court reasoned, there was no guarantee those savings would have been passed along to the employees in the form of lower premiums, co-pays, or deductibles. Absent a more direct harm, the injury was deemed too “speculative” and “conjectural” to meet constitutional standing requirements.

In other words: bad PBM deals don’t automatically equal standing.

Lewandowski v. Johnson & Johnson: A Tactical Amendment

Johnson & Johnson was hit with a similar complaint in early 2024. The plaintiff, Ms. Lewandowski, alleged that J&J breached its fiduciary duty by allowing its PBM to overcharge for drugs. The court acknowledged that she may have paid more than necessary, but because she met her out-of-pocket drug maximum each year, any overpayment ultimately accrued back to J&J, not to her. So, she too lacked standing.

Rather than appeal, plaintiffs went back to the drawing board. Just last month, they filed an amended complaint—adding more factual allegations to support the claim that overpayments led to suppressed wages and increased premium contributions. They also added a new named plaintiff who did not reach their out-of-pocket maximum, in an effort to avoid the standing trap that tanked the first round.

That amended complaint is now pending. J&J will almost certainly move to dismiss again, likely pointing to the Wells Fargo ruling as persuasive authority. The question now is whether the court will see the new facts as sufficient to establish standing, or if it will continue to hold the line on what constitutes a redressable injury.

Curtis v. JP Morgan Chase: The Expansive Complaint

Then there’s the newest—and arguably most aggressive—complaint: Curtis v. JP Morgan Chase, filed in March 2025. This lawsuit mirrors many of the themes in the Wells and J&J cases: overpriced drugs, failure to supervise PBMs, and plan participant harm. But it also goes further.

Plaintiffs allege that every generic drug in JP Morgan’s formulary was overpriced. They point to Hyrimoz, a biosimilar to Humira produced by CVS (Caremark’s parent company), as an example of a conflict-laden selection. Several lower-cost biosimilars were excluded from the formulary entirely, which plaintiffs argue was done to preserve a business relationship between JP Morgan and CVS—one in which JP Morgan reportedly earned millions.

Most interestingly, this complaint introduces a new fiduciary theory: that JP Morgan knew better and still failed to act.

The complaint cites JP Morgan’s active membership in the Pacific Business Group on Health (PBGH) and the Health Transformation Alliance (HTA)—organizations that have published clear warnings about the dangers of traditional PBM models. The plaintiffs argue that by knowingly ignoring best practices promoted by the very coalitions JP Morgan belongs to, the company breached its duty of prudence and loyalty.

It’s a novel theory—and potentially explosive. If courts accept the idea that knowledge of better strategies creates fiduciary liability, the floodgates may open.

That said, I predict courts will be cautious. Knowing a better path exists is not the same as acting imprudently. There’s still the question of market realities, labor contracts, cybersecurity needs, and the dozens of other factors employers must balance when selecting a PBM. Whether a judge will credit those constraints or deem them insufficient remains to be seen.

The Real Challenge: Constitutional Standing

Across all three cases, the common hurdle is Article III standing—a constitutional requirement that plaintiffs show an actual injury that’s concrete, particularized, and redressable.

This is where health plan litigation diverges from the 401(k) wave. In retirement cases, it’s relatively straightforward to show that excessive fees reduce investment returns. But health benefits are far more complex. Plaintiffs need to show not just that their plan overpaid—but that they personally suffered financial harm as a result.

That’s not impossible. The “perfect plaintiff” would likely be a current employee, in a high-deductible health plan, with evidence (EOBs, receipts) that they overpaid for drugs compared to market alternatives; backed by actuarial reports showing that different PBM models could have saved money, and; documentation that their premiums or out-of-pocket costs increased due to rising plan costs. When 90% of Americans have a hard time understanding the difference between co-payments and co-insurance, this seems like a tall task.

But given the magnitude of the value these cases hold for enterprising attorneys and plaintiffs alike, I believe strategies will be revised and refined—the bar may eventually be met.

A Legal and Cultural Inflection Point

The legal landscape remains fluid. The U.S. Supreme Court’s ruling in Cunningham v. Cornell University simplified pleading standards for prohibited transaction claims, potentially lowering the barrier for future ERISA cases. Meanwhile, Congress continues to scrutinize PBMs, and a handful of states have gone further—passing laws that actually designate PBMs as fiduciaries under state law. Combined with regulatory implementation of the Consolidated Appropriations Act and increasing state-level enforcement activity, we may be approaching a new era of accountability.

Or maybe not.

The pace of change is still uncertain. Litigation alone, as we’ve seen, may not be the accelerant we once imagined.

I’ll be the first to say it: I was wrong.

I once believed the threat of litigation would be the wake-up call—the thing that finally forced employers to pay attention to what was happening under the hood of their health plans. That fear of fiduciary exposure would drive scrutiny, reform, and better deals for employees.

But I don’t think that anymore.

I think the real catalyst will be discontent. Not from judges or regulators—but from plan members and employers themselves. People are angry. They’re tired of getting fleeced, nickel-and-dimed, and gaslit into believing this system is the best we can do. They’re watching drug prices skyrocket, premiums devour raises, and TPAs treat their data like proprietary secrets. They're watching their consultants and carriers grow richer while their employees skip care.

And yes, in tragic and extreme cases, like the recent murder of UnitedHealth’s CEO, we’re reminded that the disillusionment with the system is no longer abstract—it’s palpable, volatile, and dangerous.

Employers don’t need to act out of fear of lawsuits. They should act because it’s the right thing to do. Because their employees deserve better. Because they’re mad as hell and aren’t going to take it anymore.

And if that anger is what finally brings the change we’ve long needed in this space?

Then maybe I was wrong for all the right reasons.

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Told you Chris is awesome sauce.

Oh, sorry, it’s me. Preston again.

Go connect with and follow Chris!

See you out there!