The U.S. District Court for the District of New Jersey recently dismissed two of three claims in a lawsuit against Johnson & Johnson (J&J) that alleged the company’s self-insured group health plan fiduciaries violated their duties under ERISA regarding the plan’s prescription drug benefit.
The case, Lewandowski v. Johnson & Johnson, originally filed in early 2024, specifically claimed that J&J, as plan sponsor, breached its fiduciary duty of prudence under ERISA by failing to use good judgment when selecting a pharmacy benefit manager (PBM) and failing to negotiate better pricing terms for the plan and participants in its PBM services agreement. The lawsuit claimed these failures resulted in increased costs (e.g., higher plan premiums, deductibles, copayments and cost sharing), lower wages and limited wage growth, thus harming participants and beneficiaries.
Two of the three claims were dismissed because the court determined they lacked Article III standing to pursue litigation under the U.S. Constitution. To establish Article III standing, the plaintiff had to show that:
One claim in the J&J case was dismissed because the court found the plaintiff’s alleged injury due to higher premiums, deductibles and other costs was “speculative and hypothetical” rather than an injury-in-fact.
Another claim, which argued the plaintiff was injured by higher prescription drug costs, was dismissed because the court found that a favorable decision would not be able to compensate the plaintiff for the money she already paid and, therefore, would not be “redressed by judicial relief.” The plaintiff had already reached the plan’s out-of-pocket maximum, and she failed to show how she would have paid less if the plan had been administered differently.
A third claim, that J&J failed to produce plan documentation within 30 days of a written request by a participant or beneficiary, as required under ERISA, was upheld.
Note: The plaintiff has a chance to refine the claims and refile the lawsuit.
Although the J&J case was mostly dismissed, it is unclear whether the plaintiff will appeal the court’s ruling. Similar lawsuits are likely to come, where plaintiffs may have a stronger argument for standing and potentially different allegations.
