The ERISA Industry Committee (ERIC) joined coalition allies in filing an amicus brief with the U.S. Court of Appeals for the Eighth Circuit in Navarro v. Wells Fargo & Company. The brief urges the court to affirm a district court ruling that dismissed a proposed class action challenging how Wells Fargo manages prescription drug benefits under its self-funded health plan.
The plaintiffs, former participants in the Wells Fargo & Company Health Plan, do not claim they were denied any promised benefit. Instead, they argue Wells Fargo should have negotiated a better deal with its pharmacy benefit manager, which might have lowered premiums and drug costs. The U.S. District Court for the District of Minnesota dismissed the case twice, finding the plaintiffs lack standing because their claimed harm is speculative and cannot be traced to Wells Fargo’s conduct. The plaintiffs have now appealed to the Eighth Circuit.
“Getting every benefit your health plan promised, and then suing because you think a particular drug should have cost less, is not an injury caused by the employer that provided you the health insurance at issue,” said Doug Hinson, Executive Director of the ERIC Legal Center. “If that theory succeeds, every employer that sponsors a health plan becomes an easy target any time a plaintiff’s lawyer claims some price was too high. That kind of litigation does not help workers. It just adds cost and punishes employers who are offering health benefits in the first place.”
This case presents a novel, flawed theory similar to suits against a couple of other large employers (e.g., J.P. Morgan and Johnson & Johnson). The brief argues that allowing these claims to proceed would turn decisions on what benefits to offer, and how much they will cost, into a constant source of litigation and could push employers to scale back drug benefits offered to their employees. This is particularly likely if plan sponsors end up getting punished for not having information about their pharmacy benefit manager that they have been unable to get until recent changes in the law that will require more PBM transparency. Those types of legislative and regulatory changes are the answer to the plaintiffs’ complaint here, not litigation against their employers.
Read the full brief here