The end of 2024 gave group health plan sponsors several new lawsuits to watch in 2025.
Gurwitch v. SAVE ON SP LLC
On December 26, 2024, a class action complaint was filed in the U.S. District Court for the Northern District of New York against Save On SP, LLC, Express Scripts, Inc., and Accredo Health Group Inc.
The lawsuit alleges that SaveOnSP “teamed up with pharmacy benefit manager Express Scripts and Express Scripts’ affiliated specialty pharmacy Accredo to purloin hundreds of millions, if not billions, of dollars in funding meant to help patients and diverted that money to instead benefit plans and enrich themselves.”
The complaint alleges the copay-assistance strategy works as follows:
“First, SaveOnSP, Express Scripts, and Accredo flout statutory constraints on copay costs for specialty medications.
Second, SaveOnSP created a program, the SaveOn Program, that inflates patients’ copays for those targeted medications to siphon all available funding out of patient copay assistance programs.
Third, Defendants use the threat of prohibitively expensive copays to coerce patients into signing up for the SaveOn Program.
Fourth, they divert the assistance meant for patients to benefit health plan sponsors instead, while keeping 25% of the purloined fund for themselves.
And fifth, they force patients to shoulder additional healthcare expenses.”
The plaintiff argues that this alleged strategy violates the Employee Retirement Income Security Act of 1974 (ERISA) because the defendants acted as fiduciaries of the ERISA plans they administer and breached their fiduciary duties by in part (a) failing to count prescription drug copays toward the participant’s annual cost-sharing limitation balance; (b) issuing wrongful pharmacy claim denials without proper notice to the patient; (c) instructing plan participants on how to obtain patient assistance from drug manufacturers by misrepresenting or omitting material facts and causing patients to make misrepresentations to drug manufacturers; and (d) failing to perform their duties in the best interests of plan participants and instead operating the program to benefit themselves. The plaintiff also argues the alleged strategy violates the Racketeer Influenced Corrupt Organizations Act (RICO). This is a very serious lawsuit that group health plan sponsors should keep their eye on.
- Gurwitch v. SAVE ON SP LLC, 24-cv-1583, U.S.D.C. – N.D. of NY (Dec. 26, 2024)
ERISA Industry Committee v. Minnesota Department of Commerce
Another lawsuit to watch in 2025 was filed on December 27, 2024, in the U.S. District Court of the District of Minnesota by The ERISA Industry Committee (and others) against the Minnesota Department of Commerce and the Commissioner of the Minnesota Department of Commerce. The lawsuit challenges the Minnesota Pharmacy Benefit Manager Licensure and Regulation Act of 2019, in part because it allegedly (a) prevents plans from designing their mail-order networks or specialty pharmacy networks so that they include only pharmacies affiliated with the plan’s PBM; and (b) is being enforced extraterritorially by applying it to any and every prescription-drug benefit plan that uses a PBM licensed by Minnesota, even if the plan itself has no other connection with Minnesota. The plaintiffs claim the Act is not a “PBM” law – rather, it is a law attempting to regulate ERISA plans and their sponsors: “While laws like the Act are characterized as regulations of PBMs, their practical effect is often to regulate plan sponsors and the benefits that plan sponsors choose to offer through networks maintained by PBMs.”
This lawsuit creates ERISA preemption issues very similar to (or maybe the same as) those presented in PCMA v. Mulready, in which the U.S. Court of Appeals for the Tenth Circuit ruled (cert petition is still pending) that portions of Oklahoma’s PBM law are preempted by ERISA. It sure seems that well-meaning efforts to regulate PBMs continue to go one step (or 10 steps) too far.
- ERISA Industry Committee v. Minnesota Department of Commerce, 24-cv-4639, U.S.D.C. – D. Minn. (Dec. 27, 2024)
Early 2025 Compliance Issues
And finally, here are a few other random compliance issues that plan sponsors need to be focused on in 2025.
- First, health plan fiduciaries should – now – have an updated comparative analysis completed demonstrating compliance with the Mental Health Parity and Addiction Equity Act.
- Second, ERISA plan fiduciaries should – now – engage in a prudent process to select a qualified service provider to perform and document the comparative analysis, as required by the new rules.
- Third, if they have not already done so, ERISA plan sponsors should put in place a fiduciary committee – now – to oversee their health and welfare benefit plans.
There are so many other compliance items that ERISA plan sponsors and fiduciaries should be handling in 2025, but these are a few that are frequently missing.
