Health Plan Fiduciaries? Impacts from J&J Lawsuit, and More: Issue 60

More discussion of the Employer/Fiduciary wave of ERISA class action lawsuits against health plans: This short 18-min podcast explores the Lewandowski v. Johnson & Johnson ERISA class action lawsuit about the pharmacy benefits J&J offers to its employees. This was the first lawsuit of its kind that deals with the costs in an employer-sponsored health plan, specifically the prescription drug benefit.

If you haven't heard of this lawsuit before, the short story is that an employee alleges that the company and it's health plan fiduciaries breached their duties under ERISA to prudently manage its prescription drug program. The allegation that plan fiduciaries failed to negotiate lower drug costs and this caused employees to overpay for prescriptions, to incur higher out of pocket costs, and in turn higher group health plan premiums.

What can employers do to minimize the risk of this novel form of ERISA lawsuits? A good starting point is to proactively review your current PBM contract, which you can do by engaging with a consultant (Hi 👋) to explore how your plan prices drugs and how your contracts are set up. Given how complicated and opaque PBM economics can be, this review can optimize your pricing and your plan to reduce costs and increase value for participants.

Have you ever interviewed someone only for who shows up... to not be that person? You know a post on r/AskHR is going to be good with the subject line: The guy who started today is clearly not the guy we interviewed and no one else has noticed. And reading through the comments, this happens from time to time! Here's another story.

Hims & Hers is compounding GLP-1s, and this might be a problem: As one of the largest telehealth companies, Hims & Hers has found many ways of generating revenue and a growing one is compounding a version of GLP-1 weight loss drugs. Some experts however think this could lead to litigation.

Availability of fertility benefits has increased 33% since 2020, according to IFEBP: A whopping 42 percent of surveyed employers offer fertility benefits, up from 30% in 2020. The benefits vary but every type of benefit has seen an increase, such as IVF, and employers continue to say they will increase these benefits in the future. These benefits support recruiting and retention and this is backed up by employees, a third of whom say they'd leave a job because of inadequate fertility benefits and two-thirds of whom would change jobs if they'd be gaining fertility benefits.

September is Suicide Prevention Month: If you've been following me for a bit, you know mental health is a frequent theme here. Part of this is my family background with suicide when I lost my dad to it in 2001, and we'll spend future issues this month discussing the topic. Keep an eye out for more discussion here and across the benefits landscape.

⚖️ HR & Employment Practices

Texas Federal Court Halts FTC Noncompete Rule for All Employers Nationwide: On August 20, 2024, a federal court in Texas granted summary judgment to the plaintiffs in Ryan LLC v. Federal Trade Commission, setting aside and rendering unenforceable the Federal Trade Commission's (FTC) rule banning nearly all non-competes for US workers. As a result, the rule will no longer take effect for any employer on September 4, 2024. Read more

The ADA Turns 34: The Intersection of Technology, AI, and Individuals with Disabilities: On July 26, 1990, the Americans with Disabilities Act (ADA) was signed into law. On the recent 34th anniversary of the ADA, U.S. Equal Employment Opportunity Commission (EEOC) General Counsel Karla Gilbride and U.S. Department of Justice (DOJ) Deputy Assistant Attorney General Jennifer Mathis issued an announcement affirming the agencies’ ‘Commitment to Technological Equity for People with Disabilities.’ Full Article

The U.S. Mental Health Crisis and the Workplace: Over the past 10 to 15 years, U.S. employers have increasingly been encountering employee mental health issues that impact an employee’s ability to perform his/her job duties as expected and require some variety of reasonable accommodation. Full Article

How to Conduct a Workplace Investigation: Investigations of complaints are necessary to provide a factual basis for the employer’s decision-making and to mitigate potential risks. A proper investigation allows a company to determine what happened, deal with employee problems early on, appropriately enforce company policies and rules, and mitigate liability. Full Article

AI in the Workplace: It May Be Time to Update Your Employee Handbook: One of the commonly advertised features of AI is that it is beneficial for automation and increasing productivity. When a company considers improving its productivity and employing an AI tool, it will typically go through a contracting process with the service provider and assess the terms of use and associated risks for the business. But what happens if an employee presses on and starts using an AI tool that was not vetted by the company? Full Article

USERRA Short-term Paid Military Leave Class Action Revived by Federal Appeals Court: On August 22, 2024, the U.S. Court of Appeals for the Ninth Circuit issued its decision in Synoracki v. Alaska Airlines, Inc., reviving a class action under the Uniformed Services Employment and Reemployment Rights Act (USERRA). The case was brought by pilots who served in the Air Force Reserves who were seeking from their civilian employer sick leave and vacation accruals during periods of military leave. Full Article

California’s Minimum Wage Will Increase Again in 2025: California will see another increase to its minimum wage on January 1, 2025. The minimum wage in California will increase from $16.00 per hour to $16.50 per hour on January 1, 2025. This increase applies to all employers, regardless of size. The adjustment is based on the Consumer Price Index (CPI), which saw a 3.18% increase over the past year. Note that local rules supersede this, such as Los Angeles' higher minimum wage. Full Article

Come see me and peers speak at the Employee Benefit News Benefits at Work conference in a few weeks in my hometown, San Diego!