Wells Fargo, J&J & MetLife Sued by Employees for Not Reducing Healthcare Costs
A wave of novel class-action litigation is sweeping across federal courts as employees of some of America’s largest employers—including Wells Fargo, Johnson & Johnson (J&J), and MetLife—sue their employers for failing to reduce healthcare costs. The lawsuits allege that these companies breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by mismanaging pharmacy benefit manager (PBM) contracts, leading to millions in overpayments for prescription drugs.
This comprehensive guide examines the lawsuits, the legal theories behind them, the current status of each case, and what these developments mean for employers who sponsor self-funded health plans.
The New Wave of ERISA Health Plan Litigation
Plaintiffs’ lawyers—who have spent the past two decades bringing litigation over allegedly excessive fees in the $10 trillion 401(k) plan market—have increasingly turned their attention to the $5 trillion healthcare market[citation:10]. Three recent putative class actions, targeting large employers over the administration of prescription drug benefits, exemplify this trend.
According to Lexology, plaintiffs in these cases broadly allege that plan fiduciaries failed to prudently manage PBM contracts, which they argue resulted in substantial overpayments for prescription drugs and increased costs passed on to plan participants[citation:10]. The legal theory is that plan fiduciaries have a duty under ERISA to ensure that health plan costs—including drug prices—are reasonable, and that failing to negotiate better PBM contracts constitutes a breach of that duty.
As Kutak Rock LLP explains, because individuals can now review the amount a plan pays for various services and compare that information to other plans, health plan fiduciaries could be at risk if they fail to determine whether their plans’ vendor arrangements reflect market pricing[citation:2].
Case #1: Lewandowski v. Johnson & Johnson
One of the first and most closely watched cases is Lewandowski v. Johnson & Johnson, filed in February 2024 in the District of New Jersey[citation:6]. Plaintiff Ann Lewandowski, a J&J employee, alleged that J&J and its plan fiduciaries breached their fiduciary duties by failing to properly manage the company’s PBM agreement with Express Scripts[citation:2].
The complaint alleged that the PBM agreement allowed Express Scripts to charge the plan “extraordinary” costs for numerous drugs as compared to other market options, unnecessarily costing the plan millions of dollars[citation:2]. Plaintiffs sought to hold J&J’s fiduciaries personally liable for not paying the “lowest possible cost” for every drug offered by the plan[citation:2].
The Standing Problem
On January 24, 2025, the court dismissed Lewandowski’s claims, ruling that she lacked Article III standing[citation:6]. The court found that her alleged injuries—higher premiums and higher out-of-pocket costs for prescription drugs—were too speculative[citation:6].
Specifically, the court noted that because Lewandowski had reached her annual out-of-pocket maximum for prescription drugs through the payment of other medical expenses, even if she paid more for prescription drugs, it did not increase her total costs for the year; therefore, she suffered no harm and there was nothing to be redressed by the court[citation:6].
The dismissal was with leave to amend, and Lewandowski filed a second amended complaint on March 10, 2025[citation:6]. The amended complaint added a new plaintiff, Robert Gregory, a retiree enrolled in J&J’s retiree medical plan, and included more detailed allegations of harm[citation:6].
However, on December 19, 2025, Bloomberg Law reported that the J&J employees dropped the lawsuit after a second dismissal[citation:7]. The case ignited a wave of public scrutiny on employers as other major companies like Wells Fargo and JPMorgan Chase were hit with similar lawsuits[citation:7].
Case #2: Navarro v. Wells Fargo & Company
In July 2024, a group of former Wells Fargo employees filed a proposed class action in Minnesota federal court, accusing the banking giant of mismanaging its prescription drug benefits program[citation:1]. The lawsuit alleged that Wells Fargo and its plan fiduciaries engaged in prohibited transactions by agreeing to pay their PBM (also Express Scripts) excessive administrative fees relative to market rates, a breach of their ERISA fiduciary duties[citation:2].
According to Kutak Rock, plaintiffs sought to hold Wells Fargo and its fiduciaries responsible for the plan’s losses, to have the fiduciaries removed, and to have the PBM replaced by another vendor[citation:2].
Dismissal for Lack of Standing
On March 24, 2025, the district court dismissed the fiduciary breach claims on a basis similar to Lewandowski[citation:6]. Relying heavily on the Third Circuit’s decision in Knudsen v. MetLife, the court found that the complaint’s contention that higher drug prices directly caused plaintiffs to incur higher premiums and out-of-pocket costs was “entirely speculative”[citation:6].
In summing up its findings, the court stated: “While compelling and detailed, Plaintiff’s allegations are simply too speculative to show concrete individual harm, too tenuous to show causation, and too conjectural to show redressability”[citation:6].
The dismissal was without prejudice, allowing the Wells Fargo plaintiffs to file an amended complaint[citation:6]. According to Bloomberg Law, the plaintiffs attempted to use COBRA recipients to support their allegations, arguing that COBRA premiums (which are entirely paid by former employees) directly reflect plan costs[citation:4]. The amended lawsuits are seen as a bellwether for employers who sponsor their own health plans[citation:4].
Case #3: Knudsen v. MetLife Group, Inc.
The third major case, Knudsen v. MetLife Group, Inc., involved allegations that MetLife misappropriated $65 million in drug rebates from its employee health plan[citation:5]. Participants claimed that MetLife illegally took rebates from the PBM that should have been used to lower plan costs and instead used the funds for its own benefit[citation:5].
On September 25, 2024, the Third Circuit Court of Appeals upheld the dismissal of the case, ruling that plan participants lacked standing to sue for a share of PBM rebates in the health plan because they failed to allege non-speculative economic harm[citation:1][citation:5].
According to Encore Fiduciary, there was no proof that MetLife would have lowered co-pays, participant health care contributions, or given the PBM rebates to plan participants even if the rebates had been retained by the plan[citation:5].
However, the Third Circuit did not categorically rule that there is never standing in any health plan excessive fee case[citation:5]. The court made clear that any future case must allege harm to participants by showing that they were charged more than is allowed under the plan document. Standing cannot be based on pure conjecture or speculation that the plan sponsor had discretion to lower participant health plan fees if the plan experiences an overall lower rate of health expenses[citation:5].
The Legal Framework: Understanding ERISA Standing
The central legal issue in all three cases is Article III standing—whether plan participants have suffered a concrete, particularized injury that can be traced to the employer’s alleged fiduciary breach.
Under the Supreme Court’s decision in Thole v. U.S. Bank (2020), participants in a defined-benefit plan lack standing to sue based on losses to the plan that do not result in individualized financial injury[citation:5]. In Thole, the Court held that pension plan participants did not have a concrete stake in their ERISA suit even if the fiduciaries illegally caused a $750 million loss to the plan’s assets, because the plaintiffs “would still receive the exact same monthly benefits”[citation:5].
The question in the health plan cases is whether Thole applies to health plans the same way it applies to pension plans[citation:5]. Plaintiffs argue that health plans are different because participants pay premiums and out-of-pocket costs that can fluctuate based on plan expenses[citation:5].
According to Trucker Huss, the key difference is whether participants can show that they were charged more than is allowed under the plan document[citation:6]. In the J&J case, plaintiffs argued that J&J calculates participant co-pays and premium contributions under a plan formula based on the overall percentage of health care costs—meaning that if plan costs are higher, participants pay more[citation:5].
The JPMorgan Chase Case: A Potential Game-Changer
On March 13, 2025, plaintiffs filed a complaint against JPMorgan Chase & Co. alleging similar fiduciary breaches[citation:6]. However, this case has an important distinction: all three named plaintiffs have not met their out-of-pocket maximum[citation:6].
The PBM in this case is CVS Caremark, and the complaint scrutinizes JPMorgan’s business relationship with CVS for conflicts of interest[citation:6]. Notably, the complaint alleges that JPMorgan abandoned its joint venture, Haven Healthcare, because of pushback from its private banking healthcare clients, including CVS and other PBMs[citation:6].
According to Lexology, in the Stern case, the court distinguished Lewandowski and Navarro, holding that plaintiffs had alleged a price analysis sufficient to establish standing at the motion to dismiss stage[citation:10]. The Stern court also rejected arguments that out-of-pocket maximums and other plan design features limited the harm a participant could face from any allegedly overpriced drug[citation:10].
In addition, plaintiffs were able to leverage the recently lowered pleading standard for prohibited transaction claims established by the Supreme Court in Cunningham v. Cornell University to survive a motion to dismiss[citation:10].
The “Spread Pricing” Theory
One central theory referenced across the cases is the practice of “spread pricing,” in which a PBM charges a health plan more for a prescription drug than it reimburses the dispensing pharmacy, retaining the difference as profit[citation:10].
To illustrate the alleged harm, plaintiffs in these cases cited examples of generic drugs for which the plans paid more than large retail pharmacies charge without insurance[citation:10]. The complaints allege that this practice is not only wasteful but also constitutes a breach of fiduciary duty because fiduciaries should have known about and prevented it.
According to Employee Benefit News, three recent ERISA cases have alleged that plan sponsors breached fiduciary duty in the management and design of prescription drug benefit contracts[citation:3]. While plan sponsors are generally aware of the Consolidated Appropriations Act (CAA) of 2021 pharmacy reporting requirements intended to enhance price transparency, many do not realize that fiduciary breach litigation is now targeting health plans in the same manner as prior ERISA suits over 401(k) investment fees[citation:3].
What This Means for Employers
The wave of litigation has significant implications for employers who sponsor self-funded health plans.
Fiduciary Risk Is Real
As Kutak Rock warns, employers and plan fiduciaries should take steps to help reduce their litigation exposure[citation:2]. This litigation trend will likely continue and evolve regardless of the results in individual cases[citation:2].
Employee Benefit News notes that health plan fiduciaries must recognize the escalating cost environment and act decisively to demonstrate compliance with fiduciary responsibilities[citation:3]. A two-phased strategy can help create cost-effective, employee-focused health plans while addressing unnecessary claims costs[citation:3].
Action Items for Plan Sponsors
According to Kutak Rock, plan sponsors should consider establishing fiduciary committees to oversee their health and welfare benefits[citation:2]. Such fiduciary committees should:
- Create policies and procedures for selecting vendors, negotiating service agreements, and monitoring vendor performance
- Collect and review benchmarking data from other plans and compare those to proposed vendor arrangements for market reasonability
- Periodically subject vendors to requests for proposals
- Engage qualified plan consultants and ensure consultants and vendors do not have conflicts of interest
- Consider whether any direct or indirect compensation arrangements are reasonable
- Request and review agreements, fee arrangements, and prescription drug formularies and actively negotiate favorable terms
- Document the policies and procedures used to obtain, review, and monitor proposals, agreements, benchmarking information, and vendor performance[citation:2]
Learn more about conducting a benefits audit to identify opportunities for cost savings and fiduciary compliance.
PBM Contract Overhaul
According to Employee Benefit News, pharmacy costs are outpacing general medical claims, and litigation underscores the need for PBM contract scrutiny[citation:3]. Sponsors should prioritize due diligence, even before contract expiration, to ensure fiduciary compliance[citation:3].
Plan advisers should help negotiate performance-based agreements with full rebate pass-through, transparent fee disclosure, and enforceable audit rights[citation:3]. PBM compensation should be tied to measurable outcomes such as reduced net plan costs and improved medication adherence[citation:3].
Looking Ahead: Congressional PBM Reforms
Earlier this year, Congress passed pharmacy benefit manager reforms as part of the Consolidated Appropriations Act of 2026, signed into law on February 3, 2026[citation:10]. The law requires PBMs to disclose to health plans all direct and indirect compensation, among other detailed information[citation:10]. PBMs will be required to pass through 100% of certain price concessions (e.g., rebates) received by the PBM and give plans audit rights[citation:10].
The law goes into effect for calendar-year plans on January 1, 2029, giving plan sponsors time to prepare[citation:10]. However, as Lexology notes, plan fiduciaries should start to consider these issues soon—especially regarding contractual changes for upcoming multiyear contract renewals[citation:10].
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Conclusion: A Turning Point for Employer Health Plan Fiduciaries
The lawsuits against Wells Fargo, Johnson & Johnson, and MetLife represent a turning point in how employer-sponsored health plans are governed. While the initial cases faced standing challenges, the plaintiffs’ bar has signaled that they will continue to bring excessive fee cases against the fiduciaries of employer-sponsored health plans[citation:6].
If plaintiffs are able to establish standing and survive a motion to dismiss, the floodgates will open[citation:6]. Even if they are not successful with the specific claims described above, we believe they will continue to bring lawsuits under different theories[citation:6].
For employers, the message is clear: fiduciary risk for health plans is real and growing. Proactive documentation of PBM contracting decisions, regular benchmarking, and the establishment of formal fiduciary committees are essential to mitigating that risk.
Please note: This blog is for informational purposes only and is not a substitute for professional legal advice. Always consult with qualified legal counsel regarding ERISA compliance and fiduciary responsibilities.
Key Takeaways
- Wells Fargo, Johnson & Johnson, and MetLife have all been sued by employees alleging ERISA fiduciary breaches over PBM contract mismanagement
- The central legal issue is Article III standing—whether participants can show concrete economic harm from higher drug prices
- The Third Circuit’s MetLife decision held that participants lack standing without proof that plan documents require lower participant costs when plan expenses decrease[citation:5]
- The Lewandowski (J&J) case was dismissed twice and eventually dropped by plaintiffs[citation:7]
- The Navarro (Wells Fargo) case was dismissed for lack of standing, with plaintiffs attempting to use COBRA recipients to establish harm[citation:4][citation:6]
- The JPMorgan Chase case (Stern) survived a motion to dismiss, distinguishing earlier cases[citation:10]
- Spread pricing—PBMs charging plans more than they reimburse pharmacies—is a key allegation across the cases[citation:10]
- Congress passed PBM reforms as part of the Consolidated Appropriations Act of 2026, effective January 1, 2029[citation:10]
- Employers should establish fiduciary committees, benchmark PBM contracts, and document all vendor decisions to reduce litigation exposure[citation:2]
- Resources: EBSA, CMS
This comprehensive guide was published on May 21, 2026. Sources include Kutak Rock LLP, Lexology, Trucker Huss, Employee Benefit News, Encore Fiduciary, Bloomberg Law, and Law360.
ees at major companies around the US are filing lawsuits
