The Consolidated Appropriations Act of 2021 (CAA 2021) opened the door to class action lawsuits against employer-sponsored health plans in several ways. Most notably by expanding fiduciary obligations, increasing required disclosures, and creating a paper trail that plaintiffs can exploit.
Now, the recent surge in lawsuits focusing on ERISA fiduciary obligations is proving that plan sponsors concerned about their litigation risk had right to be worried.
Plan participants and plaintiff firms are increasingly alleging that employers:
- Overpaid for healthcare services by not properly evaluating vendor pricing
- Breached fiduciary duties by ignoring conflicts of interest
- Failed to act prudently in selecting or monitoring PBMs or other vendors
The most significant example so far is the Johnson & Johnson (J&J) lawsuit. Originally filed in February 2024, this new and novel legal case argues the company failed their “duty of prudence” when selecting a pharmacy benefits manager (PBM) and negotiating drug pricing.
Lewandowski v. Johnson & Johnson: A Wake-Up Call for Health Plan Fiduciaries
Overview: This class action lawsuit filed by a J&J employee principally involves mismanagement of prescription-drug benefits. The lawsuit claims J&J breached their fiduciary duties by failing to prudently select a pharmacy benefit manager (PBM) and by mismanaging J&J’s prescription-drug benefits program by failing to negotiate favorable pricing.
In a noteworthy move, the lawsuit also seeks to hold specific individuals within Johnson & Johnson personally liable as fiduciaries, including several HR executives and 20 members of the Pension & Benefits Committee.
Key Allegations:
Breach of fiduciary duty: J&J, as a fiduciary, did not act in the best interest of the plan or participants by failing to manage prescription drug costs effectively.
Unreasonable prescription drug prices: The lawsuit asserts the plan and participants overpaid for certain prescription drugs, including specialty generics, and took no steps to mitigate the unreasonably high costs.
The filing includes a table of 42 drugs with plan pricing markups of up to 13,200% above the National Averge Drug Acquisition Cost database.
Failure to prudently select a PBM: The filing alleges J&J did not properly vet or negotiate with the PBM, allowing their selection to be guided or managed by a broker with a potential conflict of interest—i.e., a financial interest in steering toward certain PBMs or including certain provisions in the PBM contract, in ways not necessarily correlated with the financial and other interests of the plan or participants.
Negative financial impact on employees: The lawsuit asserts that J&J’s actions and mismanagement cost the plan and participants millions of dollars in higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance, higher copays, and lower wages or limited wage growth.
Lewandowski v. Johnson & Johnson, Case No. 3:23-cv-00457 (D.N.J. 2023)
Lawsuit Status as of Aug 1, 2025:
The initial complaint was dismissed earlier this year for lack of standing. An amended complaint is currently under court review.
Implications for Self-Funded Plan Sponsors
The case marks one of the first major legal tests of how ERISA fiduciary rules apply to health plans post–Consolidated Appropriations Act of 2021. It also signals a new era of litigation risk for employers who don’t actively manage vendor performance and pricing transparency.
While the case is ongoing, it’s a clear reminder and warning for employers.
Fiduciary responsibilities extend to vendor management and cost oversight—especially around pharmacy benefits. Employers should review all their fiduciary obligations and maintain robust fiduciary procedures.
The lawsuit claims also underscore how important it is for employers to obtain clear and complete compensation disclosures from all service providers to understand any potential conflicts of interest.
Fiduciaries and Their Duties Under ERISA
A fundamental issue is that many companies don’t know or misinterpret who exactly holds fiduciary responsibilities, and what those obligations mean.
Per the U.S. Department of Labor, fiduciaries are those persons or entities with discretionary control or authority over plan management or assets, and/or responsibility for plan administration.
Their responsibilities and duties include:
- Acting solely in the interest of plan participants for the exclusive purpose of providing benefits and paying plan expenses
- Prudently managing plan functions or hiring experts who can
- Following the terms of their ERISA-compliant plan document
- Avoiding conflicts of interest
- Not engaging in self-dealing or transactions that benefit parties related to other fiduciaries, service providers, or the plan sponsor.
