Benefits Buzz Newsletter – March 2025

ERISA Fiduciary Breach Claims Dismissed in Prescription Drug Lawsuit

On Jan. 24, 2025, a U.S. District Court for the District of New Jersey dismissed two claims in a class-action lawsuit filed against Johnson & Johnson (J&J). The lawsuit alleged that the company breached its fiduciary duties under ERISA by mismanaging its prescription drug benefits plan, resulting in:

• Higher out-of-pocket costs for prescription drugs
• Increased premiums for plan participants

Court’s Ruling:

The court ruled that the plaintiff (a J&J employee) lacked standing to bring the lawsuit:

1. Premium Increase Claim:

   • The plaintiff claimed that higher premiums were due to J&J’s mismanagement.
   • The court found no sufficient evidence proving an injury.

2. Higher Drug Prices Claim:

   • The plaintiff alleged she paid more for prescription drugs due to ERISA violations.
   • The court agreed she had an injury traceable to the defendant’s actions.
   • However, the court ruled she lacked standing because she had already reached her prescription drug cap for each year in question, meaning a favorable ruling wouldn’t compensate her.

While this ruling favors employers, future fiduciary litigation cases may result in different outcomes based on plan design and specific allegations.

📄 Read the full case: Court Document

DOL Addresses Interaction Between Federal FMLA and State PFML Programs

The U.S. Department of Labor (DOL) issued Opinion Letter FMLA 2025-01-A, clarifying how state and local Paid Family and Medical Leave (PFML) laws interact with the federal Family and Medical Leave Act (FMLA).

Key Takeaways:

• FMLA provides 12 weeks of unpaid, job-protected leave per year for family and medical reasons.
• Employees can elect (or employers can require) the use of accrued paid leave (e.g., vacation or sick leave) to cover unpaid FMLA leave.

New Clarifications from the DOL:

• Employers must designate PFML as FMLA leave when the leave is FMLA-qualifying.
• Employers and employees can agree to use accrued paid leave to supplement PFML payments, as permitted by state law.
• The FMLA’s substitution provision does not apply to PFML:
  • Employers cannot require employees to use accrued paid leave concurrently with PFML.
  • Employees cannot demand employer-provided paid leave to run with PFML.
• FMLA protections still apply while PFML and FMLA leave run at the same time.
• Once state or local PFML is exhausted, the FMLA’s substitution provision applies for any remaining unpaid FMLA leave.

📄 Read the full DOL Opinion Letter: DOL Document