By: HUB’s EB Compliance Team

Back in 2024, the Lewandowski v. Johnson & Johnson (“J&J”) fiduciary duties lawsuit underscored the critical importance of fiduciary responsibilities for health and welfare benefit plan sponsors. In January, 2025 the original lawsuit was dismissed without prejudice. The dismissal was short lived, as an amended complaint was filed just two months later. After extensive legal battles, the court recently dismissed both counts of the amended complaint.

Notably, this dismissal was also without prejudice, which means the plaintiffs have 30 days to potentially file another amended complaint. While this latest dismissal is a victory for J&J, it does not mean fiduciary lawsuits are a thing of the past.

Case Background

The original lawsuit primarily alleged the mismanagement of J&J’s prescription drug plan, constituting a breach of the fiduciary duties owed to plan participants under ERISA. The complaint’s main allegations included:

  • The plan paid much higher rates for certain medications than the cash prices available to those without insurance.
  • The plan used a traditional Pharmacy Benefits Manager (“PBM”) compensation arrangement rather than a “pass-through” PBM arrangement.
  • The plan’s contract with the PBM allowed the PBM to steer participants needing specialty prescriptions to the PBM’s own pharmacy.

Per the complaint, these and other allegations resulted in “higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance, higher copays and lower wages or limited wage growth.” These effects, the complaint alleged, were a breach of J&J’s fiduciary duties as plan administrator.

The Amended Complaint

After the original dismissal, the amended complaint added both a new plaintiff and new allegations. The new plaintiff was primarily added because the court concluded in the prior complaint that Lewandowski lacked standing (in non-legal terms, she did not have the legal right to file these claims). The new allegations (including detailed pricing comparisons showing markups on specific drugs, a new theory that wasted money on drug overpayments reduced benefits) were added to support the plaintiff’s argument that they suffered harm due to the alleged breach.

The Continued Standing Problem

The court likewise dismissed the amended complaint for lack of standing, applying reasoning from the recent Navarro v. Wells Fargo decision involving similar facts, albeit in a different court. The Lewandowski court identified several critical issues:

  • Causation Concerns: The court found the connection between the PBM’s alleged excessive fees and the plaintiffs’ premiums and out-of-pocket costs to be "tenuous at best." The court noted that J&J’s benefit plan documents gave the company sole discretion to set participant contribution rates, which could be affected by numerous factors unrelated to prescription drug costs, including market trends, administrative expenses, non-drug medical costs and other internal or external factors.
  • Speculative Harm: The plaintiffs compared prices for only a small sample of drugs out of thousands covered by the plans. The court noted that Lewandowski allegedly overpaid $210 for two prescriptions in a year she received over $200,000 in plan benefits, while Gregory claimed a $10 overpayment in a year he and his family received more than $121,000 in benefits. The court reasoned that these selective allegations were insufficient to establish the necessary causal connection.
  • Redressability Issues: Even if plaintiffs prevailed and received all requested relief, including removal of fiduciaries, appointment of independent oversight or replacement of pharmacy benefit managers, J&J (as the plan sponsor) would retain discretion to set participant contribution rates under the plan terms. The court found no guarantee that any remedy would result in lower premiums or out-of-pocket costs for participants.

Takeaways

This latest dismissal highlights the significant obstacles ERISA plaintiffs face challenging health plan prescription drug management fee and payment practices, particularly in defined benefit-style plans where:

  • Employers retain discretion over setting premium rates
  • Multiple factors influence contribution rates beyond any single cost category
  • Benefits do not fluctuate based on individual plan asset performance
  • Plan contributions are often held in a general pool (whether or not in a trust), not in individual accounts

The court emphasized that allegations must move beyond speculation to establish the plausible causal chain required for standing. Showing that some drugs cost more under the plan than at retail pharmacies, without demonstrating how those specific costs affected individual premiums or out-of-pocket expenses, proved insufficient.

Conclusion

Despite these notable obstacles for plaintiffs, this latest dismissal is unlikely to mark the death knell for similar lawsuits in the future. Plaintiffs’ attorneys will likely continue to pursue these claims in the hopes of overcoming the standing issue Lewandowski faced. As a result, plan fiduciaries should use this case as an opportunity to review their fiduciary duties:

  1. To act solely in the interests of plan participants and beneficiaries. (This is sometimes called the “duty of undivided loyalty.”)
  2. To act for the exclusive purpose of providing them benefits and paying reasonable plan expenses. (This is sometimes called the “exclusive benefit rule.”)
  3. To act with the care, skill, prudence and diligence under the circumstances that a prudent person acting in that capacity, and familiar with such matters, would. (This is sometimes called the “prudent expert” rule.) Note, this is the duty alleged to have been breached in the Johnson and Johnson case.
  4. To follow the terms of the plan documents and other instruments governing the plan, as long as they are consistent with the law.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

Neither HUB International Limited nor any of its affiliated companies is a law or accounting firm, and therefore, they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on HUB International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect, and HUB International does not have an obligation to update this information. You should consult an attorney, accountant or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.