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JPMorgan employees have been given the green light to proceed with part of a class action lawsuit that accuses the company of mismanaging their healthcare and benefits plans.
On Monday, US District Judge Jennifer Rochon ruled that employees may proceed in their attempt to prove that the major bank violated the Employee Retirement Income Security Act of 1974 (ERISA), per Reuters.
The proposed class action accuses JPMorgan of using a “fundamentally flawed” process to hire CVS Caremark, and allowed repeated, excessive payments to the company, driving up the cost of prescription drugs and insurance premiums.
CVS Caremark’s parent company, CVS Health, is an investment banking client of JPMorgan.
Drug cost dispute prompts JPMorgan lawsuit
JPMorgan is accused of allowing CVS Caremark to mark up prices for 366 generic drugs by an average of 211%, according to the filed complaint.
This reportedly led to some staff paying more for their medication than uninsured patients.
The complaint gave the example of a 30-unit teriflunomide prescription – a medication for multiple sclerosis – which was allegedly marked up from $16.20 to $6,229, a 38,000% increase.
JPMorgan also reportedly paid $6,100 for imatinib, a leukemia drug typically acquired by pharmacies for just $70.
It alleges that JPMorgan Chase, as the plan’s sponsor, could have avoided excessive charges for employees if it had not failed to adequately audit the pharmacy benefit manager (PBM).
The proposed class action has been submitted on behalf of tens of thousands of JPMorgan employees.
Breach of fiduciary duty claims dismissed
In a 34-page decision, however, Rochon notably dismissed claims that JPMorgan breached fiduciary duties of loyalty and prudence.
ERISA stipulates that employers must run healthcare plans solely in the interest of participants and beneficiaries (‘Duty of Loyalty’) and with care, skill, prudence, and diligence (‘Duty of Prudence’).
“Decisions about joint ventures, corporate strategy, or relationships with third parties do not become fiduciary acts merely because defendants also sponsor an ERISA plan,” the federal judge wrote.
In 2025, a US Supreme Court decision raised the bar for ERISA claims to be dismissed.
JPMorgan and its lawyers did not respond to Reuters’ requests for comment.
Kai Richter, an attorney at Cohen Milstein Sellers & Toll PLLC, one of the law firms representing the plaintiffs, said it was pleased with the court’s “common sense ruling that paying more for prescription drugs constitutes an injury recognized under the law.”
“[We] look forward to litigating plaintiffs’ prohibited transaction claims,” he added.
‘Wake-up call’ for plan sponsors
As the suit moves forward, it puts JPMorgan’s plan governance and oversight under the spotlight, and marks increasing scrutiny over the role employers play in managing healthcare costs.
It is not the first major lawsuit in recent years to accuse employers of failing to meet fiduciary obligations in their delivery of prescription drug benefits to staff, or of violating ERISA’s strict prohibited transactions provisions.
Courts have dismissed similar complaints made against Johnson & Johnson and Wells Fargo, although the cases are continuing.
It cements the need for employers to ensure watertight scrutiny over internal governance and controls surrounding PBM vendor selection, to operate in compliance with ERISA.
In the ruling, the court noted that it appears unlikely that the plaintiffs will ultimately succeed with their claim, noting JPMorgan’s ample defenses.
Frier Levitt, a boutique healthcare law firm, said of the ruling that although the claims were narrowed, and JPMorgan employees face an uphill battle as their claim moves forward, the decision is a “wake-up call” for plan sponsors as it “serves as a blueprint for drafting lawsuits that can survive a motion to dismiss and force a plan sponsor to engage in costly discovery.”
“Now that the JPMorgan lawsuit has survived dismissal, the decision may encourage “copycat” lawsuits against other large employers with employee health benefit plans,” it warned.
