Following in the footsteps of similar lawsuits against Johnson & Johnson and Wells Fargo, employees of JPMorgan Chase filed an ERISA class action suit on March 13, 2025. The lawsuit alleges that JPMorgan, as the sponsor and administrator of its self-funded employee health benefit plan, breached its fiduciary duty by allowing CVS Caremark to manage the pharmacy benefits in a manner that enriched CVS Health and its subsidiaries at the expense of Plan members.
The JPMorgan lawsuit is yet another example of the growing scrutiny over PBM practices and the increasing wave of litigation targeting Plan Sponsors for failing to properly oversee their PBM arrangements. Notably, the same law firm that represented the plaintiffs in the Johnson & Johnson and Wells Fargo lawsuits also brought this case. And although those prior lawsuits were focused on Express Scripts (“ESI”) as the PBM, this latest lawsuit involves Caremark as the PBM. Because many of the practices outlined in these complaints are common among the major PBMs, it is only a matter of time before a similar lawsuit is brought against a plan sponsor that uses OptumRx as its PBM.
The Allegations Against JPMorgan Chase
The plaintiffs allege that JPMorgan knew that Caremark charged inflated prices for prescription drugs. According to the representative plaintiffs, JPMorgan failed to take action and continued its relationship with Caremark instead of a less expensive or transparent PBM to protect a lucrative investment banking business in the health care space. Plaintiffs are trying to set a new fiduciary standard—preventing large corporations that do business with the insurance carrier from considering that business relationship when deciding whether to “audit” the pharmacy benefits. The plaintiffs will likely examine whether JPMorgan permitted CVS Caremark to engage in the following practices:
- Spread Pricing – Caremark may have charged the Plan more for prescription drugs than it reimbursed to pharmacies and retained the difference as profit.
- Formulary Manipulation – The lawsuit may explore whether Caremark designed its drug formulary to steer prescriptions toward CVS Specialty pharmacy, prioritizing profits over clinical appropriateness and cost-effectiveness for Plan members.
- Lack of Legitimate Audits and Use of Conflicted Brokers – Plan fiduciaries may have failed to conduct a meaningful PBM audit, instead deferring oversight to brokers with undisclosed conflicts of interest.
- Retention of Manufacturer Drug Rebates. Rather than passing drug rebates through to the Plan, Caremark may have used its sister company, Zinc Health, to siphon rebates away from the Plan.
Why This Matters for Plan Sponsors
Employers that self-fund their employee health benefit plans have a fiduciary duty under ERISA to ensure that Plan assets are used prudently and solely for the benefit of participants. The JPMorgan lawsuit highlights the challenges Plan Sponsors face when trying to oversee PBMs, particularly when potential violations by the PBMs, like reimbursement spread and rebate spread, are concealed through layers of undisclosed affiliates and secret contracts.
Frier Levitt has long advocated for greater transparency in PBM arrangements and has assisted Plan Sponsors in conducting independent and conflict-free audits of Caremark and other PBMs. Our goal is to equip Plan Sponsors with a defense against ERISA claims by demonstrating that they have fulfilled their fiduciary obligations through diligent oversight and audits.
Protect Your Plan from PBM Abuses
With the increasing number of ERISA lawsuits against Plan Sponsors, it is more important than ever for employers to take proactive steps to monitor and audit their PBM relationships. Frier Levitt provides comprehensive legal counsel and audit services to ensure that Plan fiduciaries are meeting their obligations under ERISA.
If you are a Plan Sponsor concerned about PBM mismanagement, we welcome the opportunity to provide you with the information necessary to protect your Plan and its beneficiaries.
For more information, contact Frier Levitt today.
