On March 6, 2026, in Navarro v. Wells Fargo & Co., a Minnesota district court dismissed an ERISA fiduciary breach case filed against defendant Wells Fargo for allegedly mismanaging its group prescription drug benefits. The court found that the plaintiffs had, once again, failed to show they had suffered a concrete injury caused by the defendant’s actions to establish the legal “standing” necessary to proceed with the case.
Background
The Wells Fargo case is one of several recent high-profile class action lawsuits filed by group health plan participants against their plan sponsors. In their original complaint filed in 2025, the plaintiffs alleged that the plan paid excessive fees to their PBM and inflated prices for prescription drugs, which resulted in participants paying substantially more in premiums and out-of-pocket (OOP) costs.
However, on March 24, 2025, the court dismissed the plaintiffs’ complaint as speculative because the plaintiffs had not shown how the defendant’s alleged overpayments resulted in their higher premiums and OOP costs. (Read NFP’s article on the court's prior ruling.) Subsequently, the plaintiffs filed an amended complaint attempting to cure these deficiencies.
The Amended Complaint
The amended complaint largely repeated the original claims, alleging that Wells Fargo entered a PBM contract that:
- Set plan drug prices using an inappropriate benchmark.
- Steered participants to a PBM-owned pharmacy.
- Resulted in certain drug prices exceeding those paid by an uninsured person at a retail pharmacy.
- Charged excessive PBM administrative fees relative to comparable plans.
The plaintiffs, which now included a COBRA participant, maintained that since the plan fiduciaries had historically maintained a set ratio of employer to employee premium contributions, the high costs under the PBM contract increased their plan rates. They sought removal of the defendants as plan fiduciaries, replacement of the PBM, and restoration of alleged plan losses, among other items.
The Court’s Ruling
The court again dismissed the case, holding that the plaintiffs still failed to establish a causal connection between the alleged PBM pricing practices and participant premiums or cost‑sharing. Key points from the ruling include:
- Plan fiduciaries retained sole discretion to set contribution rates under the plan terms, and the court could not change these terms.
- Participant contributions fund overall plan expenses, not specific PBM fees or prescription drug costs. Accordingly, if the plan fiduciaries chose to maintain a set ratio of employer to employee contributions, an increase in PBM pricing would not directly result in a corresponding increase in contribution rates; there was no “one-to-one relationship”.
- Even if a sub-group of drug prices appeared high compared to market or retail pricing, participants received the benefits promised under the ERISA plan and therefore did not suffer a compensable injury. The court contrasted the plaintiffs’ claims to 401(k) plan fiduciary breach claims, in which participants allege losses to their actual benefits (i.e., account values).
Employer Takeaway
While this decision – consistent with similar rulings – may be reassuring for plan sponsors, ERISA fiduciary litigation focused on PBM pricing and compensation is likely to continue.
Employers should use these cases as a reminder to maintain strong fiduciary governance practices, including:
- Prudent selection and ongoing monitoring of PBMs and other vendors.
- Use of competitive requests for proposals and independent expertise when negotiating complex PBM contracts.
- Reasonable benchmarks to evaluate prescription drug pricing and service‑provider compensation.
Notably, the amended complaint indicated that Wells Fargo renegotiated its PBM contract after the initial lawsuit, resulting in lower prices for many formulary drugs and underscoring the value of active fiduciary oversight.
Upcoming PBM transparency requirements under recent federal reforms should assist plan sponsors in evaluating PBM pricing and compensation arrangements. Please see NFP's article on the federal PBM reforms. However, the availability of pricing information will also raise the bar for employers in terms of fulfilling their fiduciary obligations, and may also increase litigation risk since class action lawyers and participants will also have access to certain data.
For further information on ERISA fiduciary governance, please ask your broker or consultant for a copy of the NFP publication ERISA Fiduciary Governance: A Guide for Employers.
NFP will monitor related developments and provide relevant updates in Compliance Corner.
Read the court’s decision, Navarro Order on Motion to Dismiss.