Jonathan Stempel
NEW YORK, March 9 (Reuters) – A federal judge ruled on Monday that JPMorgan Chase employees may file part of a lawsuit alleging the largest U.S. bank mismanaged its health and prescription benefit plans, causing them to overpay for prescription drugs and premiums.
U.S. District Judge Jennifer Rochon in Manhattan said employees can try to prove that JPMorgan allowed repeated, unauthorized excessive payments to CVS Caremark to benefit pharmacy benefit managers and avoid “blowback” from health care customers.
A class-action lawsuit filed on behalf of tens of thousands of employees alleges that JPMorgan violated the Employee Retirement Income Security Act (ERISA) of 1974 by using a “fundamentally flawed” process to hire CVS Caremark, whose parent company CVS Health was an investment banking client.
It also said JPMorgan was aware of potential areas for cost cutting, reflecting CEO Jamie Dimon’s efforts to improve employee health care alongside Amazon’s Jeff Bezos and Berkshire Hathaway’s Warren Buffett. Their unsuccessful joint venture, Haven, closed in 2021.
Attorneys for the employees did not immediately respond to requests for comment. JPMorgan and its lawyers did not immediately respond to similar requests.
The lawsuit alleges that JPMorgan Chase had CVS Caremark increase prices on 366 generic drugs by an average of 211%, causing some employees to pay more than uninsured patients.
The price of one drug, the multiple sclerosis drug teriflunomide, rose from $16.20 to $6,229.23 for a 30-unit prescription, an increase of more than 38,000%, according to the complaint.
In his 34-page ruling, Rochon dismissed claims that JPMorgan violated its fiduciary duties of loyalty and prudence, saying “decisions regarding joint ventures, corporate strategy, or relationships with third parties do not become fiduciary acts simply because the defendants also supported Employee Retirement Income Security Act plans.”
She also said the bank may have an adequate defense against surviving claims after a U.S. Supreme Court ruling last April that said ERISA plaintiffs only had to plausibly accuse defendants of engaging in “prohibited transactions.” A defendant may raise possible immunity as an affirmative defense.
(Reporting by Jonathan Stempel in New York; Editing by Mark Porter)
