A federal judge has dismissed a lawsuit from former Wells Fargo employees who claimed the bank violated its fiduciary duties by overpaying for prescription drugs. The decision marks a win for employers facing similar allegations of mismanaging health benefits.
The lawsuit, filed in July 2024, alleged that Wells Fargo let its pharmacy benefit manager, Express Scripts, overcharge for drugs and keep rebates that could have lowered costs for employees. Plaintiffs argued this violated the Employee Retirement Income Security Act (ERISA). However, on Monday, a Minnesota district court judge ruled that the workers lacked standing as they failed to prove concrete harm.
Broader Legal Implications
This case is the second of its kind, following a February 2024 lawsuit against Johnson & Johnson, which also claimed the company failed to reduce drug costs for workers. That case was dismissed in January by a New Jersey judge for similar reasons, dampening prospects for future lawsuits.
Plaintiffs in the Wells Fargo case alleged:
The company paid excessive administrative fees to Express Scripts, rising from $9 million in 2019 to $25 million in 2022, despite declining plan enrollment.
Express Scripts kept rebates negotiated with drugmakers instead of passing savings to Wells Fargo and its employees.
Employees were forced to use Accredo, a specialty pharmacy owned by Express Scripts, despite its higher drug prices.
One example in the complaint highlighted a $10,000 cost for a 90-unit prescription of the generic multiple sclerosis drug fingolimod, which could have been filled for $650 to $900 at retail pharmacies.
Judge’s Rationale
Judge Laura Provinzino ruled that the plaintiffs failed to show direct harm, calling their argument “tenuous at best.” She noted:
● The connection between Wells Fargo’s fees and employee drug costs was unclear.
● High-cost drug examples were not representative of the full plan formulary.
● Employees’ benefits remained unchanged, even if Wells Fargo mismanaged the plan.
● Despite dismissing the case, Provinzino acknowledged the plaintiffs’ frustration with drug costs, calling their concerns “understandable.”
Next Steps
The lawsuit was dismissed without prejudice, meaning plaintiffs could revise and refile. Wells Fargo did not dispute the lawsuit’s facts but declined to comment on whether its relationship with Express Scripts has changed.
This ruling signals a higher bar for future ERISA lawsuits over employer health plan management, potentially limiting legal challenges against companies accused of failing to control drug costs.
