Lawsuit alleges health plan fiduciaries mismanaged prescription drug benefits

A lawsuit filed on February 5, 2024, against Johnson and Johnson (J&J) and its health plan fiduciaries is a good reminder that the fiduciary duties that exist under the Employee Retirement Income Security Act of 1974 (ERISA) apply not only to qualified retirement plans but also to ERISA health and welfare plans. There’s likely a very strong “rest of the story” to the allegations in the lawsuit—and J&J will no doubt vigorously dispute and defend the case—but the allegations in the class action complaint give employers and their plan fiduciaries much to think about.

Role of health plan fiduciaries

ERISA provides that anyone who exercises discretionary authority or discretionary control over the management of an ERISA plan, or exercises any authority or control over the management or disposition of plan assets, is a “fiduciary.” Thus, the persons who select and monitor a plan’s service providers are likely fiduciaries. Examples of service providers for a group medical plan would include a plan’s network, third-party administrator, pharmacy benefit manager (PBM), and consultant/broker.