KEY POINTS: (1) The floodgates for plaintiff lawyers to sue health plan sponsors in fiduciary-breach litigation rests on the narrow standing test from the MetLife decision of whether plaintiffs can show that their plan sponsor charged them more than is allowed under plan documents.
J&J plaintiffs argue that they fixed the pleading flaw from the MetLife case by alleging that J&J calculates participant co-pays and premium contributions under a plan formula based on the overall percentage of health care costs. But it is not clear that J&J uses this formula, or that it is required under the plan document.
(2) Beyond standing to sue, federal courts could alternatively protect plan sponsors from ERISA health plan litigation abuse by ruling that setting participant premiums and co-pays is a settlor function immune from fiduciary liability.
The new front in the ERISA plaintiff bar’s excessive fee war against plan sponsors has moved to health plans. These novel fiduciary-breach theories allege that the initial litigation victims – Johnson & Johnson and Wells Fargo – have harmed health-plan participants by failing to ensure that pharmacy benefit managers have properly priced every single prescription drug offered in the company-sponsored health plans. The fiduciary breach theory is ominous because every sponsor of a health plan has trouble managing PBMs and health care costs – even the federal government struggles to manage Medicare health care costs. At worst, the lawsuits seek to turn health plans into liability traps for health care costs that are impossible to manage. At best, the lawsuits are disagreements with the disclosed level of benefits a plan sponsor might voluntarily choose to provide company employees.
The key threshold issue in the initial two cases is whether participants have standing to sue for alleged overpayment of health plan fees. Standing requires individualized economic harm. The Supreme Court in Thole v. U.S. Bank held that participants in a defined benefit plan have not suffered economic harm and lack standing to sue a defined benefit plan if they have received all of the plan benefits they were contractually entitled to receive. Recognizing that they cannot argue that participants have not received promised health benefits, plaintiff lawyers have instead tried to contrive standing to sue defined benefit health plans by claiming that participants would have lower co-pays, out-of-pocket costs, and premiums if the plan health costs were lower. The theory is that plan sponsors would trade lower plan fees and prescription drug costs with lower cost sharing to participants. Standing for a potential avalanche of fiduciary-breach cases hinges on this type of conjecture.
On September 25, 2024, the Third Circuit Court of Appeals ruled in one of the first health plan excessive fee cases involving pharmacy benefit manager (PBM) rebates. In Knudsen v. Met Life Group, Inc., the Third Circuit ruled that plan participants lacked standing to sue for a share of PBM rebates in the health plan because they failed to allege non-speculative economic harm. There was no proof that Met Life would have lowered co-pays, participant health care contributions, or given the PBM rebates to plan participants. But the Third Circuit did not categorically rule that there is never standing in any health plan excessive fee case when participants are receiving their promised benefits. Instead, the court made clear that any future case must allege harm to participants by showing that they were charged more than is allowed under the plan document. Standing cannot be based on pure conjecture or speculation that the plan sponsor had discretion to lower participant health plan fees if the plan experiences an overall lower rate of health expenses. The but-for cause of the harm must be tied to the plan document.
Both parties in the J&J health plan excess fee case rushed to inform the federal court that the same Met Life decision supports their position. Plaintiffs immediately filed a notice of supplemental authority to the court asserting that their J&J excess fee health plan lawsuit was exactly “the different case” that meets the standing threshold tied to the plan document. J&J lawyers filed a similar letter to the court asserting that the Met Life decision proves the opposite, because the speculative standing theories of the Met Life and J&J case are similar.
Who is right? Dozens of articles have warned about the new risk of excessive fee litigation involving health plans. But most of these articles are superficial, without any real analysis. This blogpost goes deeper, analyzing the Met Life decision and whether there is participant standing in the ominous new wave of health plan excessive fee cases against J&J and Wells Fargo. We explain exactly what the plaintiff lawyers are alleging to meet the high standing bar for participants to sue a defined benefit health plan. Specifically, plaintiff lawyers in the J&J excess fee case are arguing that J&J calculated the participant share of health plan contributions based on a percentage-share formula of projected health plan spending, and thus participants pay more if the overall health care costs are inflated. J&J asserts that this same argument was alleged in MetLife in which the participant contribution rate was allegedly maintained at 30%. The key issue is whether the alleged contribution formula is speculation, or grounded in the J&J plan document. This narrow nuance will define whether plaintiff lawyers have standing to sue health plan sponsors for fiduciary breaches in failing to reduce plan health costs.
Standing to Sue Defined Benefit Plans Under the Supreme Court’s Decision in Thole v. U.S. Bank
Plaintiffs have the burden to establish Article III standing that they have suffered an “injury in fact.” An injury-in-fact is an invasion of a legally protected interest that is (a) concrete and particularized, (b) actual or imminent, and (c) not conjectural or hypothetical. Establishing an injury-in-fact at the motion to dismiss stage “is not Mount Everest” – the contours of the injury-in-fact requirement “are very generous, requiring only that [a] claimant allege[] some specific, identifiable trifle of injury.” Plaintiffs, nevertheless, must allege “something more than an ingenious academic exercise in the conceivable.” The focus of the injury-in-fact inquiry is “whether the plaintiff suffered harm.”
On June 1, 2020, the Supreme Court held in Thole v. U.S Bank N.A. that participants in a defined benefit pension plan governed by ERISA lack standing to sue the plan’s fiduciaries based on losses to the plan that do not result in individualized financial injury. The Thole petitioners lacked such an injury because, regardless of the alleged losses to the plan, they remained legally and contractually entitled to receive the same monthly payments in the future.
In Thole, the Supreme Court held that pension plan participants did not have a concrete stake in their ERISA suit even if the fiduciaries illegally caused a $750 million loss to the plan’s assets, because the plaintiff-participants “would still receive the exact same monthly benefits that they [we]re already slated to receive.” Of “decisive importance” to the Thole Court’s decision was that the retirement plan was a defined-benefit plan, such that “retirees receive[d] a fixed payment each month, and the payments d[id] not fluctuate with the value of the plan or because of the plan fiduciaries’ good or bad investment decisions.” The plaintiffs had “been paid all of their monthly pension benefits” that they were “legally and contractually entitled to receive.” Thus, the Court concluded that the plaintiffs lacked standing because the “outcome of th[e] suit would not affect their future benefit payments.” In contrast, had the plaintiffs “not received their vested pension benefits, they would of course have [had] Article III standing to sue.” The Court declined to answer whether plan participants would have standing “if the mismanagement of the plan was so egregious that it substantially increased the risk that the plan and the employer would fail and be unable to pay the participants’ future pension benefits.”
The key point in Thole was that plaintiffs could not allege that alleged fiduciary misconduct [in mismanaging investments] jeopardized or otherwise affected their future pension payments. Any injury the defendants caused the plan therefore did not affect the plaintiffs personally – they suffered no monetary harm, and win or lose, they would not receive “a penny more” or “a penny less.” They lacked a “concrete stake in the lawsuit” and thus lacked constitutional standing.
Thole has been a game changer. As a result of the decision, participants in defined-benefit plans governed by ERISA will largely be unable to rely on losses to the plan or its funding status alone to pursue litigation against plan fiduciaries. The decision has substantially shut the door to most imprudent investment claims against defined benefit plans. The key question, however, is whether Thole v. U.S. Bank’s high bar to standing against defined benefit retirement plans applies to health plans. That was the key issue in the MetLife case described below.
The MetLife Decision: Standing to Sue Defined Benefit Health Plans – Is There a Difference Between Retirement and Health Plans?
On September 25, 2024, the United States Court of Appeals for the Third Circuit issued a decision in Knudsen v. Metlife Group, Inc., upholding the District Court of New Jersey’s dismissal of ERISA fiduciary-breach claims for lack of standing. Participants in the MetLife Group’s self-funded health plan claimed that their former employer, MetLife, had misappropriated the plan’s funding in violation of ERISA by diverting $65 million in drug rebates from the plan to itself. Plaintiffs alleged that MetLife’s illegal conduct had caused them to pay higher out-of-pocket costs, mainly in the form of insurance premiums, and that MetLife owes them those misappropriated funds.
To get a flavor of the case, here is the first paragraph of the appellate brief filed by plaintiff-petitioners’ counsel: “MetLife Group, Inc. illegally took $65,237,379 from a trust used to fund its employees’ health benefits under the MetLife Options & Choices Plan. It then passed the Plan’s losses on to the Plan’s members, including Plaintiff-Appellants Marla Knudsen and William Dutra. To make up the Plan’s losses, MetLife forced Plaintiffs-Appellants to pay higher health insurance premiums. Put simply, MetLife caused Plaintiffs-Appellants to lose money.”
Participants paid around 30% of overall contributions to the plan, including co-pays (a fixed fee paid at the point of service for medical care or prescription drugs), deductibles (an amount the insured pays for medical services or drugs before the plan will pay covered expenses), or co-insurance (a percentage of the cost of medical services or drugs that the insured pays after satisfying the deductible) paid by plan participants. After accounting for these participant contributions, the plan pays claims from the trust funds or MetLife pays claims from its own general assets.
The plan paid Express Scripts as its exclusive pharmacy benefit manager (PBM) between $3.2 million and $6.3 million in annual compensation. Pursuant to the PBM agreement, Express Scripts negotiated volume discounts and rebates with drug manufacturers. Plan documents expressly provided that MetLife would receive prescription-drug rebates from Express Scripts and “appl[y] these [rebates] toward[] Plan expenses.” But, according to Plan documents, “[t]hese rebates are not considered in calculating any co-payments or Coinsurance under the plan.” [NOTE: On appeal, participants argued that the plan document did not specify how rebates applied to calculating insurance premiums – just that it did not apply to co-pays or co-insurance.] From 2016 to 2021, “the Plan was credited with approximately $65 million in drug rebates pursuant to its contract with Express Scripts. MetLife directed 100% of the $65 million in drug rebates to itself.
Plaintiffs asserted that MetLife’s contracts with Express Scripts was itself a plan asset. They alleged they would have received “multiple benefits” if MetLife had not violated ERISA that: (1) MetLife had a fiduciary duty to reduce ongoing contributions on account of the rebates collected by the Plan; (2) MetLife may have reduced co-pays and co-insurance for pharmaceutical benefits; and (3) third, MetLife may have distributed rebates to participants in proportion to their contributions to the plan.” On appeal, participants changed their argument – or at least MetLife claimed that they changed their argument – to recast the case as involving losses of plan assets that resulted in a “shortfall” or “deficit” that MetLife required plan participants to “make up” so that it could pay plan benefits. In sum, MetLife claimed that plaintiffs never alleged this premium-inflation theory until appeal. [This may be relevant in the J&J case when plaintiffs argue that the MetLife case advanced the right theory, but insufficient allegations to justify standing.]
The New Jersey District Court concluded that “Plaintiffs do not have a concrete stake in the outcome of this lawsuit and have not pled facts to demonstrate an individualized injury.” Relying on the Supreme Court’s decision in Thole v. U.S. Bank and other district precedent, that district court explained that “Plan participants here have no legal right to the general pool of Plan assets,” and “any asserted injury to the Plan is not an injury to Plaintiffs themselves.” Furthermore, the Court “observe[d] that Plaintiffs do not contend that they did not receive their promised benefits,” but instead “allege that they paid excessive out of pocket costs.” The District Court explained that excessive out of pocket costs are “not an individualized injury” “in the context of the kind of defined benefit-type Plan.” The Court reasoned that plaintiff’ allegations that MetLife “’may’ have reduced co-pays and co-insurance, or that Plan participants ‘may” have received a proportionate distribution of rebates” were “speculative and conclusory.” It was mere “conjecture” whether plaintiffs’ suit would result in either reduced out-of-pocket costs to participants.
On appeal, the Third Circuit held that the complaint fell sort of alleging concrete financial harm, but refused to go as far as MetLife argued, or even as far as the District Court. The Court stated that it agreed with plaintiffs “[a]s a purely theoretical proposition,” and “decline[d] to hold that Thole . . . require[s] dismissal, under Article III, whenever a participant in a self-funded healthcare plan brings an ERISA suit alleging mismanagement of plan assets increased his/here out-of-pocket expenses.” The Court noted that “[a] contrary conclusion, would mean that MetLife could charge Plan participants thousands of dollars more in premiums than is allowed under Plan documents . . . and Plan participants would have no judicial recourse to seek return of their overpayments.”
While leaving open the door to potential standing in a different case with different facts, however, the Court found that the Met Life claims were speculative. According to the Court, plaintiffs generally alleged that their out-of-pocket costs (co-pays, co-insurance, premiums) increased, “but they do not allege which out-of-pocket costs increased, in what years, or by how much.” Any increase in participant costs was determined by MetLife, “but it is incumbent upon Plaintiffs to allege concrete facts establishing that MetLife’s challenged conduct caused increased costs.”
The Court faulted plaintiffs for failing to include well-pleaded allegations that the drug rebates (or even the total value of plan assets) are, “under Plan documents, used to calculate Plan participants’ out-of-pocket costs and that the effect of these inputs would decrease costs.” This is necessary because plaintiffs must show the purported violative conduct – not sharing the $65m of PBM rebates with participants – was the “but-for-cause of this injury in fact, namely, an increase in their out-of-pocket costs above what they would have been if MetLife had deposited the rebate monies into the Plan trust. In other words, Plaintiffs must show that they have an “individual right” to the withheld rebate monies, such that, MetLife’s purportedly unlawful retention of the monies harmed Plaintiffs. On these allegations, the Court held that “it is speculative that MetLife’s alleged misappropriation of drug rebate money resulted in Plaintiffs paying more for their health insurance or had any effect at all.” The inference that MetLife would have applied rebates to participant costs was equally as valid as the inference that MetLife would not have taken any of plaintiff’s preferred actions in reducing participant health care contributions.
In summary, the MetLife standing test for an overpayment claim against a health plan is as follows: Participants can show standing through allegations that their plan sponsor charged them “more . . . than is allowed under Plan documents.”
Applying the MetLife Decision to the J&J Excess Fee Health Plan Case
The J&J health plan excess fee case was filed in the same federal district court in New Jersey where the MetLife case was originally filed. In Lewandowski v. Johnson & Johnson, Case No. 3:24-cv-00671, a plan participant alleges that J&J breached ERISA’s duty of prudence by entering into an agreement that allowed PBM to charge supposedly “excessive” prices for two limited categories of prescription drugs. In particular, Counts 1 and II of the Amended Complaint allege that the costs of 42 generic specialty drugs and 14 generic non-specialty drugs – out of the thousands available under the plan – were too high, claiming that cheaper prices were available through online or neighborhood pharmacies.
J&J moved to dismiss the First Amended Complaint based on lack of standing and the failure to substantiate the claims of an imprudent fiduciary process [by challenging a tiny subset of a massive plan]. As to the primary argument of lack of standing, J&J argued that the plaintiff-participant lacks standing to assert the fiduciary breach claims because she received all of the benefits she was contractually entitled to receive – that is, prescription drug benefits at the cost and under the terms defined in the plan documents. More specifically, J&J argued that plaintiff’s out-of-pocket costs under the plan were completely unaffected by the challenged conduct. In each year in which the plaintiff participated in the plan, she reached the plan’s limit for out-of-pocket costs given her heavy use of the plan [over $100,000 in one year] based on expenses unrelated to the prescription drug benefit. J&J thus argues that she suffered no cognizable injury, because plaintiff would have still paid the exact same out-of-pocket amount each year even if her prescription drugs through the plan had cost nothing.
Plaintiff opposes the motion to dismiss by arguing that this is a garden-variety excessive fee fiduciary-breach case alleging that the J&J health plan fiduciaries failed to appropriately select and monitor a plan service provider and control plan expenses. They allege that the participant has standing because the plan’s overpayments “were passed on to her in the form of monthly premiums.” Because of alleged mismanagement, “Plaintiff and other class members who purchase overpriced prescription drug prices, higher coinsurance, and higher premiums for the prescription drugs through the plans paid higher out-of-pocket costs on inflated prescription drug prices, higher coinsurance, and higher premiums for the prescription-drug portion of the plans.” The higher health care costs were also alleged to be passed on to J&M employees in the form of lower wages or limited wage growth.
Plaintiffs argue that this case is different than Thole because she paid “inflated premiums and inflated out-of-pocket costs for prescription drugs.” They claim “[i]t is common sense, basic math, and unquestionably plausible that everyone’s premiums increase when overall plan spending increases.” Specifically, “the amount of required contributions is set by Defendants based on the Plans’ expected spending for each calendar year – i.e., Defendants set total contributions at the amounts necessary to cover expected costs. It follows that when Plan spending is inflated by fiduciary misconduct, the required contributions are inflated as well.”
The Opposition to the Motion to Dismiss argues that J&J follows a formula to calculate participant contributions. They claim that “[r]esponsibility for these inflated contributions are split proportionally between J&J and its employees.” Over the last ten years, J&J alleged have “consistently allocated responsibility for contributions to make a fixed ratio between employer contributions and employee contributions.” (emphasis added). J&J had submitted a declaration from J&J’s Head of Global Health & Welfare Benefits that disputes Plaintiff’s allegations with respect to out-of-pocket costs, but plaintiffs claim that the declaration does not dispute the claim that J&J passes on overcharges to employees through increased premiums.
Plaintiffs further argued that its standing does not depend on how contributions are divided between J&J and its employees because she is now paying the full cost under COBRA now that she has left the company. By statute, her premiums are now 102% of the combined employer and employee contributions for similarly situated individuals under the plans. Plaintiff is now paying the entirety of the premiums in amounts allegedly inflated by Defendants fiduciary violations.
Plaintiff specifically argues that she corrected the pleading deficiency in the MetLife case by alleging participant premiums are calculated according to a mathematical formula. Whereas in MetLife plaintiffs alleged that MetLife “may” have applied contributions to reduce participant fees – essentially a hypothetical – plaintiff in J&J alleged a “consistent ten-year practice of allocating increases in plan spending proportionally between J&J and employees”; alleged plaintiff “has paid more in premiums than she would have paid absent Defendants’ fiduciary breaches”; and that she “will be required in the future to pay more in premiums than she would be required to pay absent Defendants’ fiduciary breaches.”
Supplemental Notices to the J&J Court: How Plaintiffs Attempt to Distinguish the MetLife Standing Decision
As noted above, plaintiffs in the J&J excess fee case have already tried to argue in the opposition to the motion to dismiss that they fixed the standing problem in the MetLife case. They claimed that participants were harmed because participant premiums were calculated by a fixed formula under the plan. This is in contrast to the speculative claim in MetLife that the company could have reduced participant premiums by some percentage of PBM rebates. Nevertheless, plaintiff’s lawyers refined their arguments in the supplemental letter issued on the same day the MetLife decision was issued. In case it was not obvious, this is high-stakes litigation.
Cohen Milstein’s letter to the Judge Quraishi on behalf of the plaintiff-participant summarized that that MetLife court left open the door to excessive fee or overpayment claims against health plans. ERISA plaintiffs have Article III standing if their complaint “include[s] nonspeculative allegations, that if proven, would establish that they have or will pay more in premiums, or other out-of-pocket costs” as a result of the defendant’s ERISA violations. Plaintiff explained that the MetLife plaintiffs failed to meet this standard because they only alleged that “it may” have been consistent with MetLife’s fiduciary duties to reduce participant ongoing contributions on account of PBM rebates collected by the plan. The MetLife court noted that “in a different case, a plaintiff may well establish such a financial injury sufficient to satisfy Article III.”
Plaintiff’s letter brief asserts that “[t]his is that [different] case.” They assert that the MetLife plaintiffs “put forward the right theory, with insufficient allegations.” By contrast, the J&J plaintiff “matches the right theory with the requisite allegations”: “Instead of alleging that defendants ‘may have’ done various things, Plaintiff here specifically alleges, with accompanying data, that Defendants “set the required employee contributions each year as a percentage of expected spending by the Plans”; that Defendants purposefully set that percentage “as the level necessary to maintain a consistent and stable ratio of employer contributions and employee contributions”; and that as a result, “if Defendants stopped causing the Plans to overspend on prescription drugs by millions of dollars each year[,] employee contributions would be lower as well, in order to maintain the same split between employer and employee contributions to which Defendants have demonstrated their commitment.”
J&J countered with their own supplemental letter to the court, with the main argument that the complaint fails to meet the MetLife standing test that premiums are calculated under the plan document in a way that harmed participants. J&J lawyers argued that the MetLife and J&J standing theories were indistinguishable. In MetLife, participants alleged that premiums were generally set at 30% of projected plans costs, so that is overall plan costs were lower, their premiums would have been lower too. The Third Circuit held that the challenged conduct was not the “but-for cause” of higher premiums, such as by alleging “in what years” and “by how much” premiums increased, or how premiums are calculated “under the Plan documents.” J&J asserted that plaintiffs in both complaints ignored many factors that can affect premiums, such as non-drug medical costs, and both complaints failed to show that the way in which “Plan documents . . . calculate” premiums made any injury fairly traceable to the challenged conduct.” More specifically, J&J argued that the graph in the complaint showing that participant premiums were approximately the same percentage of projected costs each year, those allegations are “no better” than the MetLife plaintiffs’ allegations that premiums were generally set at 30% of projected plan costs. In both case, the notion that premiums would have been lower if projected costs had been lower was too speculative to confer standing.
Final Thoughts – Is There Standing in the J&J Health Plan Excess Fee Case?
Like the entire genre of 500+ cases alleging excessive fees in retirement plans, the new excessive fee assault on health plans represents manufactured lawsuits by plaintiff lawyers. It is not about helping plan participants. It is about how plaintiff lawyers can profit under the federal ERISA statute. Even if the plaintiff lawyers win, plan participants are not going to receive lower insurance premiums in any material way. They will receive a few dollars from any settlement, but the plaintiff lawyers will receive huge recoveries.
It will not change the cost of health care in America. That is a societal that cannot be solved by litigation. These lawsuits will not cause health care providers or pharmaceutical companies to lower their drug or medical costs. If anything, the litigation risk will encourage employers to ditch their health plans and avoid liability traps manufactured by plaintiff lawyers.
The question of whether there is standing for plaintiff lawyers to sue company-sponsored health plans for excessive fees is all about whether trial lawyers will profit. The issue is nevertheless monumental because huge liability is at issue. We need the federal courts to serve as gatekeepers to stop the litigation abuse at the start – before hundreds of cases are filed.
The MetLife decision from the Third Circuit is helpful because it lays out a coherent test. The key to standing to sue for overpayments against a company-sponsored health plan is through allegations that the plan sponsor charged “more . . . than is allowed under Plan documents.” The J&J plaintiffs have learned from the MetLife case and tried to remedy the pleading deficiencies from that case. They assert that the MetLife and J&J cases both espouse legitimate excessive fee fiduciary-breach theories, but take the position that the MetLife lawyers failed to plead sufficient facts [i.e., they are ironically calling out the MetLife plaintiff lawyers for malpractice in a case about fiduciary malpractice – this is ERISA humor].
We agree that the MetLife and J&J health plan excessive fee cases are similar. A comparison of the two complaints, however, is complicated by the fact that the J&J complaint is more sophisticated. Defense lawyers in the MetLife case took the position that plaintiffs never alleged a premium-inflation theory like what is alleged in the J&J case. It was the focal point of the appeal, but the complaint was stated in a hypothetical of pure speculation that MetLife had the option or discretion to reduce participant health premiums based on PBM rebates. The complaint did state that participant contributions stayed close to 30% of overall costs, but it did not expressly allege that participant premiums were calculated on a fixed formula. That is the difference in what is alleged in the J&J case.
Nevertheless, we do not believe that the allegation of a fixed formula to calculate premiums is enough to carry the day on standing. It is relevant to standing, because it is a claim that participant fees go up or down depending on overall health costs. But there is a critical element missing in the standing requirement: the J&J plaintiff has not alleged that she was charged more than the plan documents permit. The fixed formula assertion, and the supporting chart in the complaint that the percentage of J&J participant contributions remained stable for ten years, is supposition. It is a speculative theory. There is no proof that is how J&J calculates participant premiums. The key element missing is that plaintiff does not appear to allege that the fixed formula is required by the J&J plan document. The MetLife standing test requires that the but-for harm to participants must be tied to the plan document. Unless they can prove that the plan document required J&J to reduce participant fees when the company reduced fees, we do not believe the high bar to standing has been met.
The bottom line is that the J&J plaintiff has failed to allege that she was charged more than the plan document permits. That is where standing should be denied, but the stakes are high.
Two final points. First, J&J argued that the participant maxed out her annual deductible because of her heavy use of the plan. This means that if she paid over $241 for a prescription [an example used in the briefing], it would not matter because she spent over $5,000 in drug costs per year. Plaintiff argues that she is still harmed every time she overpays for a drug, even if it doesn’t matter by year end. This is a strange argument, but that is their claim.
Plaintiff lawyers in the J&J case argue that they can sue for excessive health plan fees without alleging the fiduciary process, without comparisons to other plans, and without having to rebut a plan sponsor’s explanation for challenged conduct. They want the right to file fiduciary-breach claims with no rules. It is a bold and brazen position. Surely Congress should amend the ERISA statute to protect against this type of litigation abuse.
Finally, there is another off ramp. Setting premiums is not a fiduciary function. It is a settlor function. It is an additional reason why claims of excessive participant health care costs cannot support standing for ERISA fiduciary claims. We do not understand why it is not a key ground for dismissal in the motion to dismiss of the J&J case. The settlor-fiduciary distinction continues to be ignored and chipped away in the barrage of class action litigation. We will come back to this critical issue in future post, but wanted to flag it as another key defense for plan sponsors facing this new type of liability.
