Wells Fargo Health Plan Lawsuit Dismissed

A U.S. District Judge in Minnesota dismissed a lawsuit filed against Wells Fargo & Company in July 2024 by former employees who claimed that the company mismanaged its health plan and caused employees to overpay for prescription drugs.

Judge Laura M. Provinzino said in the ruling that, under the Employee Retirement Income Security Act, the plaintiffs’ allegations were insufficient to establish Article III standing.

The former employees alleged in Navarro v. Wells Fargo & Co. that Wells Fargo mismanaged the plan’s employee prescription drugs benefits program, resulting in employees paying “substantially more” in premiums and out-of-pocket costs for certain drugs than they would have absent of Wells Fargo’s “mismanagement.”

The plaintiffs, represented by firms Gustafson Gluek PLLC and Fairmark Partners, LLP, claimed that fiduciaries at the bank agreed to pay its Pharmacy Benefits Manager, Express Scripts, Inc., high prices for generic drugs that were “widely available at drastically lower prices.”

Wells Fargo denied these allegations and filed a motion to dismiss the case in September 2024 for lack of standing or failure to state a claim upon which relief can be granted.

The court found that the former employees could not satisfy Article III’s standing requirements because their alleged harm is “speculative and, ultimately, not redressable.”

In addition, the court said it is speculative that the allegedly excessive fees the plan paid to Express Scripts “had any effect at all” on plaintiffs’ contribution rates and out-of-pocket costs for prescriptions.

“There are simply too many variables in how plan participants’ contribution rates are calculated to make the inferential leaps necessary to elevate plaintiffs’ allegations from merely speculative to plausible,” the court opinion stated.

Although the court sympathized with the plaintiffs and understood its argument about the high cost of prescription drugs, the judge argued that their allegations were too speculative to show concrete individual harm and too conjectural to show redressability.

The complaint was dismissed without prejudice.

In a similar case, current and former participants of the JPMorganChase health insurance plan sued the company earlier this month, alleging the company mismanaged its prescription drug benefit under its health insurance offering.

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 Federal Trade Commission has also released two interim reports, as well as filed an administrative lawsuit against the “big three” PBMs, arguing that these middlemen have opaque business practices and mark up the prices of prescription drugs.