Compliance March 17, 2025

JPMorgan Sued Over Health Plan’s Generic Drug Costs

The defendants claim the company breached its ERISA fiduciary duty by putting business interests ahead of the plan and its participants.

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Current and former participants in the JPMorganChase health insurance plan for employees have sued JPMorgan Chase & Co. and JPMorgan Chase Bank and company executives and committees, alleging breaches of fiduciary duties under the Employee Retirement Income Security Act for how they allege the company mismanaged its prescription drug benefit under its health insurance offering.

The case, Seth Stern et al. v. JPMorgan Chase & Co. et al., was filed Thursday in the U.S. District Court for the Southern District of New York. The plaintiffs are Seth Stern, Angela Bindner and Marianne Schmitt. Defendants include the company, the bank, its U.S. benefits executive, the company board’s compensation and management development committee, and Bernadette J. Branosky, Stephen B. Burke, Linda B. Bammann, Todd Combs and Virginia Rometty, all members of the board of directors.

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JPMorgan could not be reached Friday for comment.

The complaint claims the defendants breached their fiduciary duties by “agreeing to grossly inflated prescription drug prices, costing the JPMorgan Plan and its participants/beneficiaries millions of dollars through higher payments for prescription drugs, higher premiums, higher out-of-pocket costs, higher costs, higher deductibles, higher coinsurance, higher copays and suppressed wages.”

The plaintiffs’ filing states that the defendants’ mismanagement led to the plan paying its pharmacy benefits manager—CVS Caremark, which is not a defendant in the case—too much for many generic drugs, which the complaint claims are widely available for less. In particular, the suit cites as an example the $6,229 price the plan’s participants paid for a 30-unit supply of the drug teriflunomide (the generic version of the drug Aubagio). The plaintiffs’ complaint states that the same supply of the same drug is available, without insurance, at retail and online pharmacies for prices between $32.96 and $11.05.

“No prudent fiduciary would agree or allow for its plan and participants/beneficiaries [to] pay a price that is more than two hundred times higher than the price available” at retail, the complaint states. The filing adds that the price disparities continue across all 366 generic drugs across the plan’s formulary.

The case was filed after the Federal Trade Commission, in January, issued a second report in as many years, finding that the three big U.S. PBMs have marked up drug prices.

The FTC issued its first interim report in July 2024 and, a few months later, filed an administrative lawsuit against the “big three” PBMs—Caremark Rx, Express Scripts and Optum Rx—and their affiliated group purchasing organizations.

Under the Consolidated Appropriations Act of 2021, plan sponsors are required to attest that the fees they pay for health care plans are fair and reasonable. As a result, it is important that plan sponsors apply a fiduciary process when evaluating their health plans, including pharmacy benefit managers, as well as remain aware of any pending litigation involving the providers.

The ERISA Industry Committee called on Congress last September to deem PBMs as fiduciaries under ERISA, as they play a significant role in negotiating prescription drug costs for plan sponsors managing health plans. Congress has not yet taken any action on the issue.

The suit against JPMorgan states that the company pays CVS Caremark about $3 million annually in administrative fees, in addition to the fees that Caremark collects for prescriptions.

The plaintiffs are seeking “appropriate” damages, to have the suit deemed a class action, and to have the defendants make the plan whole for all losses resulting from the claimed fiduciary breaches. They have also asked that an independent fiduciary be appointed to run the plan and that the PBM be replaced.

The plaintiffs are represented by the New York-based law firm Cohen Milstein Sellers & Toll and Washington, D.C.-based Fairmark Partners.

Deals & People March 14, 2025

Retirement Industry People Moves – 3/14/25

New CTO at Carson Group; Mesirow Wealth Management hires Gary Pattengale; Kristin McCarthy named head of product at PCS Retirement; and more.

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New Chief Technology Officer at Carson Group

Ramesh Vaswani has joined advisory firm Carson Group as its chief technology officer. He will be responsible for developing and executing Carson Group’s technology strategy and aligning the company’s business and technology goals.

Vaswani joins from Envestnet, where he was Global Group Head of Engineering. He has more than two decades of experience in technology leadership and has spent his career leading digital transformation, product leadership, and executing global technology strategies across the financial services sector, the company said.

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“We can all agree that technology is changing the way we operate, and investors expect their adviser to be up to date on the tools that make their experience the best it can be. We’re constantly thinking about how we can make it easier for our advisers to best serve their clients, and we recognize the tremendous role technology plays in this mission,” said Burt White, CEO of Carson Group, in a statement.

Mesirow Wealth Management Hires Gary Pattengale

Mesirow announced that Gary Pattengale has joined the company as senior vice president, advanced planning specialist, wealth advisor. He will work with high-net-worth individuals and families as an adviser and serve as a centralized, specialized tax planning resource for all Mesirow Wealth Advisors.

Pattengale, with more than 30 years of tax planning and financial services experience, will be based in the firm’s Highland Park, Illinois, office.

Prior to joining Mesirow, Pattengale held roles at Corient and Northern Trust, advising individuals, families and entities on their investment and financial planning needs and helping corporate executives and key employees navigate their stock-based compensation plans.

“Gary’s decades of experience as a financial consultant adds a key component of advanced tax planning to our best-in-class client service,” said Brian Price, CEO, Mesirow Wealth Management, in a statement. “We look forward to Gary’s collaboration with our Wealth Advisors as they serve their clients, and to the contributions he will make to the ongoing growth of Mesirow Wealth Management, our firm’s founding capability.”

Kristin McCarthy Named Head of Product at PCS Retirement  

PCS Retirement named Kristin McCarthy head of product, where she will lead the strategic direction, development, and management of PCS’s product portfolio, focusing on the ERISA and Individual Retirement business lines, the company said.

McCarthy has more than 25 years of industry expertise, having worked previously at Aspire Financial, Morningstar Investments, and Benetic Inc. She holds an MBA from Elon University and a degree in Finance from Virginia Tech. 

“We are thrilled to welcome Kristin. Her extensive experience and dynamic approach to product strategy will be instrumental in advancing PCS’s mission to deliver unmatched products and services to financial professionals and their clients,” said Scott David, PCS CEO, in a statement. 

PCS also announced that Ted Harlan will assume the role of head of business transformation, responsible for leading enterprise-wide initiatives that align with PCS’s corporate growth strategy. “Ted’s leadership and his vast knowledge of our operations ensure that he will play a crucial role in driving transformational initiatives,” said David.

Ice Miller Grows Its Governmental Benefits Team

Nicole Giambarrese, the former General Counsel of the New York City Police Pension Fund, has joined law firm Ice Miller as a partner on the firm’s Governmental Benefits team.

Giambarrese spent more than twenty years serving the largest municipal police department in the world, which postions her to help local and state governmental employers, as well as retirement systems, navigate employee benefit issues and federal tax compliance, according to a statement.

“We are thrilled to welcome Nicole to our comprehensive and multifaceted Governmental Benefits team,” said Kathleen Sheil Scheidt, partner and chair of Ice Miller’s Workplace Solutions Group. “Nicole’s extensive knowledge of employee benefits law, coupled with her leadership experience in public pensions, make her a valuable asset to our clients.”

Ice Miller has served government entities across 43 states, the District of Columbia, and the federal government for more than 40 years. 

Mark Proctor Joins Latham & Watkins LLP in New York

Latham & Watkins LLP announced that Mark Proctor joined the firm’s New York office as a partner in the Investment Funds Practice. Proctor advises clients on the establishment of, investment in, and ongoing operation of private investment vehicles, and regularly provides advice to investment managers in connection with various strategic transactions.

Proctor joins Latham from Willkie Farr & Gallagher. He has experience representing private fund sponsors, asset managers, insurers, institutional investors, and family offices. He received his JD from the University of Pennsylvania Law School and his BA from Cornell University.

“Mark brings a deep understanding of the complex intricacies of fund structuring and operations that will tremendously benefit our private equity and private capital clients, and we are excited to welcome him to Latham and the New York office,” said Marc Jaffe, Office Managing Partner of Latham & Watkins in New York. “Mark’s addition further strengthens Latham’s position as both the go-to firm for clients on their most sophisticated matters, as well as a destination for top lateral partner talent.”

The Berwyn Group Promotes Mike Schoonveld

The Berwyn Group, a provider of solutions for pension and health plan administrators, promoted Mike Schoonveld to general manager of the strategic accounts team.

Previously, Schoonveld was the national director of Sales, managing a team that significantly expanded Berwyn’s market presence and client partnerships, the company said. Prior to that role, he held sales and leadership positions at CoStar Group, Thomson Reuters and Micron Technology.

“Today third-party administrators (TPA) rely on our solutions to offer their clients a more comprehensive service and solution.  As our business broadens within the TPA segment, we continue to invest in both new solutions and talent to support our clients,” said John Bikus, president of Berwyn, in a statement. “With extensive years of experience working with clients across all of our industries and understanding the unique value Berwyn brings, Mike is the ideal individual to lead the team dedicated to supporting TPA clients.”

New Head of Global Head of Real Estate Research at Principal Asset Management

Richard Hill is now the senior managing director, global head of real estate research and strategy, at Principal Asset Management.

Hill joins the firm from a similar role at Cohen & Steers. Prior to that he spent nine years at Morgan Stanley.

At Principal, the company said, Hill will work across portfolio teams on capital allocation strategies developed through a relative value framework. He will also lead the real estate global research team with responsibility for delivering the house economic and real estate views to clients.

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