District Court Issues Preliminary Injunction in Arkansas PBM Law Challenge

On July 28, 2025, the court in Express Scripts, Inc. v. Richmond, No. 4:25-cv-00520-BSM, (E.D. Ark.) issued an order granting a preliminary injunction of the Arkansas Act 624 (Act 624), which seeks to place additional regulations and limitations on pharmacy benefit managers (PBMs) doing business in the state of Arkansas. Specifically, Act 624 restricts a PBM's ability to own or operate pharmacies in Arkansas by requiring the Arkansas State Board of Pharmacy to revoke or not renew pharmacy permits in cases where the permit holder is a PBM or a subsidiary of a PBM. Act 624 was signed into law by Arkansas Governor Sarah Huckabee Sanders on April 16, 2025, and was set to take effect on January 1, 2026. The court recognized that while Arkansas already has in place several recently enacted PBM laws, Act 624 was "the most aggressive one."  

In response to Act 624, several healthcare companies (consisting of pharmacies and PBMs) and the Pharmaceutical Care Management Association (PCMA) filed lawsuits against the Arkansas State Board of Pharmacy seeking declaratory and injunctive relief with respect to the new law. The plaintiffs also sought preliminary injunctive relief seeking to prevent enforcement of Act 624 during the pendency of the litigation. In the various complaints filed by the plaintiffs, which the court consolidated into one proceeding in June 2025, the allegations included an assortment of constitutional claims asserting that Act 624 violates: (1) the Commerce Clause; (2) the Privileges and Immunities Clause; (3) the Supremacy Clause (because it is preempted by (a) TRICARE (which provides health insurance plans to uniformed service members), (b) ERISA, and (c) Medicare); (4) the Bill of Attainder Clause; (5) the Takings Clause; and (6) the Equal Protection Clause. In granting the preliminary injunction in Richmond, the court held that the plaintiffs were likely to succeed on their Commerce Clause and TRICARE preemption claims, while unlikely to succeed on the remaining claims. 

In determining the plaintiffs were likely to succeed on their Commerce Clause claim, the court held that Act 624 discriminates against out-of-state companies. The court noted the statute's discriminatory intent was made clear by its text, which "states that its purpose is to eliminate plaintiffs' business tactics that have driven locally-operated pharmacies out of business." The court further noted that Arkansas already has PBM laws in place that sufficiently address the state's concern of "curtailing plaintiffs' business tactics and minimizing the conflicts of interest inherent in PBM-affiliated pharmacies." The court found that the "burden [Act 624 places] on interstate commerce is excessive" because Arkansas has less burdensome means to achieve its stated purposes.

With respect to the preemption claim, the court held that the plaintiffs were likely to prevail on their claim that TRICARE preempts Act 624. Specifically, the court reasoned that Act 624's attempt to "prohibit PBM-owned pharmacies from delivering healthcare to Arkansas patients" would frustrate the purpose of TRICARE, as Congress intended for the Department of Defense to have control over with whom and how it contracts to provide healthcare to members of the armed forces. The court viewed the PBM restrictions under Act 624 as "frustrat[ing] TRICARE's expressed federal policy."  

There is surely more activity to come in these closely watched consolidated cases, as the defendants will likely pursue an appeal of the decision. The decision is especially noteworthy following the Supreme Court's decision in Rutledge v. Pharm. Care Mgmt. Ass'n, 592 U.S.80 (2020), which rejected an ERISA preemption challenge to another Arkansas PBM law. The Richmond decision illustrates that even those state laws that may escape ERISA preemption post-Rutledge are susceptible to legal challenges on other bases, which could temper states from placing overly restrictive limitations on PBMs and pharmacy networks.

Sixth Circuit Deepens Circuit Split on Availability of Surcharge Remedy Under ERISA

On July 17, 2025, a panel of the Court of Appeals for the Sixth Circuit affirmed the dismissal of a case brought by a group of former Ruby Tuesday managers and executives against a bank that administered their benefit plans, alleging that the defendant violated plan terms in connection with the dissolution of plan trusts during Ruby Tuesday's bankruptcy proceedings. The plaintiffs in Aldridge et al. v. Regions Bank, No. 24-5603, were participants in multiple Ruby Tuesday "top-hat" plans for high-level executives, which are exempt from many of ERISA's statutory protections, including the imposition of fiduciary duties on plan administrators. Because the participants did not have a cause of action against Regions Bank (Regions) for breach of ERISA fiduciary duties, they alleged that Regions breached its duties to them under state common law. In addition, the participants brought an ERISA claim for "equitable surcharge" under 29 U.S.C. § 1132(a)(3), which provides for "appropriate equitable relief" to remedy violations of ERISA or enforce the provisions of ERISA or a plan's terms. The Sixth Circuit held that the state-law claims were preempted by ERISA, and that "equitable surcharge" is not an available remedy under § 1132(a)(3).

The facts of the case revolve around a trust agreement between Regions and Ruby Tuesday. Regions was the trustee under the agreement responsible for administering the company's top-hat plans. In accordance with ERISA's requirements for top-hat plans, the agreement specified that the plans' assets were to be treated as general assets of Ruby Tuesday. Therefore, the assets were available to satisfy Ruby Tuesday's creditors when the company entered bankruptcy. After the bankruptcy proceedings concluded, a group of participants brought this suit in federal court on the basis that Regions violated the trust agreement by, among other things, ceasing benefit payments and transferring the trust's assets to the bankruptcy estate too early, thereby denying benefits owed to the participants under the plans. They alleged common-law claims of breach of fiduciary duties, contract, and trust, and also sought to recover the benefits via a surcharge theory under ERISA, arguing the benefits were due under the plan and the agreement. The district court dismissed the case on the basis of preemption, as to the state-law claims, and for failing to plead an available remedy under 29 U.S.C. § 1132(a)(3) as to the ERISA claim.

The Sixth Circuit affirmed on both fronts. On the preemption issue, the panel found that the state-law causes of action had a "connection with" ERISA such that they were expressly preempted. "[N]o matter the 'label' the Participants place on their four causes of action," the court opined, "their claims all seek the same thing: the benefits allegedly due them under their ERISA-covered Plans." ERISA preempts causes of action that purport to allow plan participants to pursue benefits in ways alternative to ERISA's enforcement regime, which provides for a cause of action to recover benefits in 29 U.S.C. § 1132(a)(1)(B). The court rejected the participants' contention that ERISA should not preempt state-law causes of action that protect rights not protected by ERISA, reasoning that allowing enforcement of state-law duties that ERISA chose not to impose against administrators of top-hat plans would "eviscerate" the legislative decision to create "less-intrusive regulation of top-hat plans."

Regarding the issue of ERISA remedies, the Sixth Circuit agreed with Fourth Circuit's decision in Rose v. PSA Airlines, Inc., 80 F.4th 488 (4th Cir. 2023), that surcharge is not an available remedy under 29 U.S.C. § 1132(a)(3) as a form of "appropriate equitable relief." The panel cited heavily from Rose, finding its reasoning that surcharge was not a remedy "typically available in equity," as required under Supreme Court precedent interpreting § 1132(a)(3), more compelling than contrary precedent from other circuits. As in Rose, the court found that surcharge, which is essentially another word for "damages" used in the equity context, was historically only available in courts of equity in the rare case where they had exclusive jurisdiction and as such had wide discretion in crafting remedies. Typically, however, courts of equity could not order surcharge, as general monetary relief was the province of the courts of law. Therefore, the court reasoned, because § 1132(a)(3) made only "typical" equitable remedies available and because it before held that monetary relief is not available under § 1132(a)(3), surcharge could not be sought pursuant to this provision. 

The Sixth Circuit's holding on available remedies under 29 U.S.C. § 1132(a)(3) is significant, as it brings the circuit in line with the Fourth Circuit in a split among federal courts on the ability of ERISA plaintiffs to seek surcharge as an equitable remedy, particularly in a case, as here, where the plaintiffs may not otherwise sue for a recovery under ERISA on the basis of a fiduciary breach. Multiple other circuit courts have approved of surcharge as an ERISA remedy, following dicta in CIGNA Corp. v Amara, 563 U.S. 421 (2011).

Tobacco Surcharge Cases Continue in the Courts

On July 29, 2025, the U.S. District Court for the District of Minnesota granted in part and denied in part a motion to dismiss by the defendants in Chirinian v. The Travelers Companies, Inc. & The Travelers Administrative Committee, Case No. 24-cv-3956 (LMP/DTS), a tobacco surcharge case alleging violation of ERISA's health plan antidiscrimination and wellness program provisions. The defendants in this case, Travelers Companies, Inc. and The Travelers Administrative Committee (Travelers), moved to dismiss arguing that the plaintiff did not have standing, that the plaintiff's claims were time-barred, and that the ERISA claims failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). The court disagreed with Travelers' standing and statute of limitations arguments but agreed that the plaintiff failed to state a claim as to all but one of her claims, retaining only part of a count "premised on the failure to notify Plan participants that recommendations of an individual's personal physician will be accommodated." The court determined these allegations plausibly pled a violation of ERISA's anti-discrimination rules at 29 C.F.R. § 2590.702(f), which set forth the requirements for a nondiscriminatory wellness program. 

On July 24, 2025, a new tobacco surcharge case was filed against Nordstrom, Inc. (Nordstrom) in the United States District Court for the Western District of Washington, Pinckney et al. v. Nordstrom, Inc., Case No. 2:25-cv-01396. The plaintiffs, former Nordstrom employees who paid a tobacco surcharge to maintain their health insurance, bring four ERISA claims on behalf of a putative class: (1) a violation of ERISA's full reward rule under ERISA § 702(b) and § 2705 of the Public Health Service (PHS) Act incorporated into ERISA; (2) a violation of ERISA § 702(b)'s notice and disclosure requirements; (3) breach of fiduciary duty and prohibited transaction claims pursuant to ERISA §§ 404 and 406; and (4) failure to provide plan documents upon request in violation of ERISA § 104(b)(4). The suit seeks the recovery of the tobacco surcharges as well as plan-wide equitable relief pursuant to ERISA §§ 409, 502(a)(2) and 502(a)(3). 

The plaintiffs in Nordstrom allege, similar to allegations in other cases, that "[u]nder ERISA, wellness programs must offer, and provide notice of, a reasonable alternative standard that allows all participants to obtain the 'full reward'---including refunds for surcharges paid while completing the program." The complaint alleges that "[r]ather than comply with these requirements, the [Nordstrom plan] imposes a flat discriminatory tobacco surcharge without providing participants with a reasonable alternative standard" that "delivers the ‘full reward' to participants who satisfy it mid-year," but rather "merely prospectively halts future charges once a participant enrolls in cessation or goes tobacco-free; it does not refund surcharges already paid that year." (emphasis in original). The complaint also alleges that Nordstrom failed to provide notice of the availability of a reasonable alternative standard and that Nordstrom's program violates ERISA "by imposing its tobacco surcharge at the family-coverage level, without regard to whether the employee uses tobacco," such that "an employee enrolling in family coverage could be penalized, even if only a spouse or adult child uses tobacco." The complaint also includes prohibited transaction and fiduciary breach claims relating to the operation of the tobacco surcharge program.

We have previously written about an earlier wave of these tobacco surcharge cases filed in the fall of 2024, and a 2023 consent order entered into between the U.S. Department of Labor (DOL) and the plan administrator of a self-funded health plan, in Su v. Flying Food Group, LLC, No. 1:23-cv-06583 (N.D. Ill. Aug. 30, 2023). Most of the cases filed in the fall of 2024 are pending motions to dismiss. 

In The News

Anthony Shelley, Joanne Roskey, and DeMario Carswell were mentioned in Law360 in connection with a case in which the firm represents a coalition of Iowa-based employers and employee benefit plans challenging Iowa's new PBM law, Senate File 383. The U.S. District Court for the Southern District of Iowa issued a partial preliminary injunction blocking enforcement of several provisions of the law, citing preemption under ERISA and violations of the First Amendment.

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