The recently filed class-action lawsuit by a Johnson & Johnson (J&J) employee against its employer for failing to fulfill its fiduciary responsibilities relating to health benefits stands to have lasting ramifications for both employers/health plan sponsors and employees/plan members. With the passage of the Consolidated Appropriations Act of 2021 (CAA), employers are being held accountable to meet their fiduciary responsibilities including assessing and managing their employee benefits to ensure that costs were optimized. The J&J lawsuit alleges that the company mismanaged drug benefits, claiming that no responsible fiduciary “would agree to make its plan and beneficiaries pay a price two hundred and fifty times higher than the price available to any individual who just walks into a pharmacy and pays out-of-pocket.” This filing could be a precursor to many future lawsuits where it is found that similar behavior exists. Further, it can prompt employers/plan sponsors to rethink their employee benefits. The ramifications can be significant for all stakeholders.
In addition to increasing their fiduciary diligence and making sure any fiduciary they have contracted is also upholding their fiduciary responsibilities, employers should consider hiring an external utilization manager or in-house benefit managers who are charged with scrutinizing the expenses being incurred and making sure the lowest health care costs are being achieved. The key is to make sure that the interests of employees/plan members are placed first and ahead of the interest of the employer, union or association sponsoring the plan.
