By Jonathan Stemple
NEW YORK, March 9 (Reuters) – A federal judge ruled on Monday that JPMorgan Chase employees may pursue part of their lawsuit accusing the largest U.S. bank of mismanaging its health and prescription benefits program, causing them to overpay for prescription drugs and premiums.
U.S. District Judge Jennifer Rochon in Manhattan said the employees could prove that JPMorgan authorized frequent, unauthorized overpayments to CVS Caremark, to benefit the pharmacy benefit manager and prevent “swindling” from health care customers.
The proposed class action on behalf of tens of thousands of employees alleges JPMorgan violated the Employee Retirement Income Security Act of 1974 (ERISA) by using a “fundamentally flawed” process to hire CVS Caremark, whose parent is an investment banking client of CVS Health.
It also said JPMorgan was aware of potential areas to cut costs, reflecting CEO Jamie Dimon’s involvement with Amazon.com’s Jeff Bezos and Berkshire Hathaway’s Warren Buffett in an effort to improve employee health care. Their failed joint venture Haven closed in 2021.
Lawyers for the staff did not immediately respond to requests for comment. JPMorgan and its attorneys did not immediately respond to requests for comment.
According to the complaint, JPMorgan allowed CVS Caremark to mark up the prices of 366 generic drugs by an average of 211%, causing some employees to pay more than uninsured patients.
One drug, the multiple sclerosis drug teriflunomide, increased from $16.20 to $38,000 to $6,229.23 for a 30-unit prescription, the complaint said.
In her 34-page decision, Rochon rejected claims that JPMorgan breached fiduciary duties of loyalty and prudence, saying “decisions about joint ventures, corporate strategy, or relationships with third parties are not made as fiduciary acts or use solely SA plans.”
She also said the bank may have an adequate defense to surviving claims after a U.S. Supreme Court decision last April that said ERISA plaintiffs need only plausibly allege that plaintiffs engaged in “prohibited transactions.” Defendants may raise possible immunity as an affirmative defense.
(Reporting by Jonathan Stempel in New York; Editing by Mark Porter)
