On January 24, 2025, a New Jersey district court dismissed two ERISA fiduciary breach claims in Lewandowski v. Johnson & Johnson, et al. The plaintiff, representing a proposed class, alleged Johnson & Johnson (J&J) mismanaged its prescription drug plans by failing to prudently select and monitor its pharmacy benefit manager (PBM), leading to excessive drug costs. The court ruled the plaintiff lacked standing under Article III of the U.S. Constitution, a decision that underscores the difficulties plaintiffs face in establishing standing for similar claims.
Key Findings
-
- The plaintiff alleged that J&J’s PBM selection and contract terms led to higher drug costs, increasing premiums and out-of-pocket expenses for participants.
- The court determined that the plaintiff failed to show an actual, concrete injury-in-fact, as required under Article III.
- Citing the Knudsen v. MetLife Group Inc. case, the court ruled that speculative claims about premium increases and plan costs did not establish standing.
- While the plaintiff argued that she overpaid for certain drugs, the court found this claim was not redressable since she had already reached her out-of-pocket maximum.
- The court dismissed the fiduciary breach claims but allowed the plaintiff to amend her complaint within 30 days to address deficiencies.
- The plaintiff’s claim regarding J&J’s failure to timely provide plan documents was allowed to proceed.
Employer Considerations
The ruling in Lewandowski is a significant victory for health plan sponsors and follows similar decisions that limit broad fiduciary breach claims based on ERISA. Courts have consistently held that plaintiffs must demonstrate a personal and concrete injury linked to fiduciary mismanagement. The decision reinforces that general allegations of excessive fees or plan mismanagement will not suffice.
However, the court left open the possibility that a participant who had not yet reached the plan’s out-of-pocket maximum might establish standing in a similar case. This suggests that while the ruling is a positive development, ERISA fiduciary breach litigation may continue under different factual circumstances.
Employers should:
-
- Review ERISA fiduciary governance: Ensure that PBM contracts and prescription drug pricing structures are thoroughly evaluated and documented.
- Monitor legal developments: This case sets a precedent, but similar claims may evolve.
- Ensure compliance with ERISA document requests: The court’s decision to allow the plaintiff’s document request claim to proceed highlights the importance of timely responses.
While the Lewandowski ruling provides some relief to employers, it serves as a reminder that proper plan governance and documentation remain critical to minimizing litigation risks.