Johnson & Johnson Case Dismissed:

Win for Plan Fiduciaries

Lewandowski v. Johnson & Johnson made plan fiduciaries and ERISA attorneys pay closer attention to the risks of fiduciary breaches for health and welfare benefit plans which IMA previously wrote about here. Amongst other things, the complaint alleged that Johnson & Johnson failed to prudently manage prescription drug costs in its selection and management of the plan’s pharmacy benefit manager (PBM), which led to excessive drug costs for the plan and for plan participants.

The case was dismissed for lack of standing. The court determined that the alleged injury due to higher premiums, deductibles and coinsurance was speculative and hypothetical, and the injury due to higher out-of-pocket costs was not redressable.

For many employers worried about an increase in litigation and potential liability related to breach of ERISA fiduciary duties, this case dismissal may be interpreted as good news. However, potential plaintiffs may view the details in the court’s dismissal as a guide to how to successfully bring future claims. Regardless, we encourage employers as plan sponsors and fiduciaries to act in the best interest of plan participants and to regularly monitor benefit compliance requirements and operate their plans accordingly. 

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information. This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.

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